By David Blymire, The Sentinel
The number of Pennsylvania electric customers who’ve chosen an alternative energy supplier remains low.
A 1996 state law gave consumers the ability to choose who generated their power beginning in 1999.
By April 1, 2000, more than 429,600 residential customers had switched from their local power company to an alternative supplier.
However, those numbers began falling off dramatically as people switched back to their local power companies.
“What happened was, starting in the summer of 2000, the wholesale prices started to increase,” says Sonny Popowski, Pennsylvania’s Consumer Advocate.
That made it harder for competitors to beat the prices of the established local power companies such as Met-Ed and PPL Electric Utilities, whose prices are capped, he says.
Competitors simply left the marketplace, forcing some of their customers to return to their local power companies.
Rather than seeing the situation as a failure of competition, Popowski says, “To me, it shows that the Pennsylvania law was well-designed to protect customers.”
He says the idea was to create an environment where rates would go down, not up.
Monopoly broken up
Before deregulation was adopted, electric utility companies such as Met-Ed and PPL operated in a regulated monopoly. They generated electricity, transmitted it across power lines and distributed it to customers.
The state law separated generation from transmission and distribution, allowing electric consumers to choose their own generators of power. Traditional local utilities transmit and distribute electricity along the power grid to customers.
How to explain the concept in simpler terms?
Paul Copleman, spokesman for Community Energy, suggests thinking of the power grid as a bath tub.
Imagine all of the power plants – including nuclear, coal-burning and wind-generated – are “pouring” water into the tub at the same time when they generate power. How much “water” they add depends on how many customers they serve.
The tub is “drained” when a consumer flips on a light switch at home or runs a dishwasher or another appliance.
The amount of water in the tub at any given time is controlled by a central operator.
The nearest designated coordinator, PJM Interconnection based in Valley Forge, directs the flow of electricity to 35 million people in Pennsylvania, Delaware, Illinois, Maryland, New Jersey, Ohio, Virginia, West Virginia and the District of Columbia.
Caps expire in 6 years
When rate caps established by law come to an end in 2010, some electric companies may raise their rates while others may go down, Popowski says.
He notes the case of Duquesne Light in western Pennsylvania, which saw rates go down when its rate caps expired in 2002 because its “stranded costs” disappeared.
Stranded costs represent the cost of maintaining equipment, lines and generators. Power companies were authorized to charge customers a transition fee for changing suppliers to help cushion the loss of revenues to cover those expenses.
No incentive to shop
The percentage of customers using alternative suppliers in the areas served by Met Ed and PPL, which cover most of Cumberland County, remains among the lowest in the state.
PPL spokesman Jim Nulton says the model of deregulation established in the state really gives customers no incentive to shop around.
“A number of customers gave it a try and realized there was not a big change in their electric bill,” he says, adding PPL has “always been priced competitively even before deregulation occurred.”
Met Ed spokesman Ernie Waters says the established rates are hard for new companies to beat and not many alternative suppliers are offering power to residential customers.
The “green” power alternative offered by Green Mountain and Community Energy offer customers “an idea” and their customers are those “people out there willing to pay a premium for that idea,” Waters says.
PPL’s loss of customers peaked at 25,704 in July 1999. By April of this year, that number had fallen to just 1,688, reports the Pennsylvania Office of Consumer Advocate.
The number of Met Ed customers seeking alternative sources of energy peaked at 45,728 in January 2000 but fell to 2,272 in April.
Adams Electric Cooperative has no alternative suppliers operating in its service area in rural Cumberland County.
Nulton explains that PPL Generation is separate from PPL Electric Utilities. The latter company handles transmission and distribution, while the former generates power.
PPL Electric recently filed a request with the PUC to raise its distribution rates by nearly 10 percent, the first hike since 1995.
If approved, the increase would turn up on customers’ electric bills under the “distribution” heading. That’s separate from “generation,” where the price is capped through 2009 and customers have the option of choosing a supplier.
Popowski estimates the number of Pennsylvanians choosing wind-generated power at more than 100,000, even though the service costs more than power produced by traditional sources such as coal or nuclear plants.
His office lists Community Energy and Green Mountain Energy as two alternative suppliers that are licensed to operate in areas served by Met Ed and PPL.
“We’re pleased that there is a demonstrated demand,” says Copleman, spokesman for Community Energy.
The company markets power generated by five “wind farms” in Somerset and Fayette counties and the Pocono region.
Copleman says Community Energy sells power in blocks of 100 kilowatt hours. That means a customer who buys 10 blocks of power pays $25 extra per month on top of the basic charge.
“Besides the obvious environmental and public health benefits, it will drive the development of new wind power in the state” and lead to the creation of more jobs and more construction, Copleman says.
Community Energy says the state’s wind farms produce enough energy to power about 8,200 homes. The company also says wind-driven power cuts into the amount of pollution produced by traditional sources of electricity.
Green Mountain customers pay up to $41.75 per month for generation and transmission if they use 500 kilowatt hours of power, the office of consumer advocate reports. The same amount of electricity costs $22.94 from Met Ed and $25.47 from PPL Utilities.
Dickinson College in Carlisle is among numerous Pennsylvania colleges and universities that buy wind-generated electricity from Pennsylvania wind farms. Businesses such as Giant Eagle supermarket chain also buy wind-generated power. The state government also buys power from wind farms and recently renewed its contract, Copleman says.
Better safe than sorry
State Rep. Jeff Coy, D-89, is urging customers who paid utility bills through CashPoint, a third-party bill processing company, to keep all receipts in light of CashPoint’s recent bankruptcy.
CashPoint made it possible for consumers to pay utility bills and parking tickets through agents across the state, including at its own payment centers as well as designated grocery stores, convenience outlets and check cashers.
“With CashPoint forced into bankruptcy last month, my concern is that consumers who used this service to pay their bills on time may be threatened with utility service termination or collection procedures,” says Coy, whose district stretches over parts of Cumberland and Franklin counties.
He continues, “Regardless of what bill processor you use, it is important to keep your receipts. That way, if for some reason your payment has not been credited to your account, you will have proof that your bill was paid.”
Complaints can be filed by calling the Office of Consumer Advocate at 1-800-684-6560 or the Pennsylvania Public Utility Commission’s Bureau of Consumer Services at 1-800-782-1110.
Utilities serving the 89th District include Adams Electric, Allegheny Power, PPL and Penelec.