“Price to Compare” – Choose Your Utility Provider and Save Money

By: Margaret A. Morris and Marlane R. Chestnut

The Pennsylvania Public Utility Commission (PUC) wants all electric and gas utility customers to be as familiar with the Price to Compare (PTC) as they are with their own social security numbers and children’s birthdays. According to the PUC, knowing and using the PTC can save customers substantial amounts of money and empower them to make their own utility decisions.

Briefly, the three components of electric service are generation (the production of the electricity), transmission (the movement of electricity from where it is generated to a point of distribution), and distribution (the delivery of electricity from distribution line to the end user). For gas service, the three components are commodity (natural gas produced from a well), transmission (the movement of the gas from the well through a series of underground pipes called the interstate transportation system), and distribution (the delivery of the gas to the end user).

Customers can chose their electric or gas suppliers, allowing them to shop for the generation part of their electric service (the supplier also will include the transmission costs) or the commodity part of their gas service. The PUC continues to have full jurisdiction over the distribution rates and services provided by the electric and gas distribution companies (such as PECO) and has limited jurisdiction over the service provided by electric and gas suppliers, which are licensed – not regulated – by the PUC.

The PTC is the price customers pay for generation/commodity if they continue to buy from the local electric or natural gas distribution companies (or other default service providers if not provided by the Electric Distribution Company or Natural Gas Distribution Company), using their default service. It changes quarterly, and is not based on the cost to provide service (the way distribution rates are) but on the default service provider’s cost to acquire that supply, reconciled annually. Both the PUC and the Pennsylvania Office of Consumer Advocate (OCA) have information on their websites detailing each default provider’s PTC and the available suppliers, and their current offers.

Although the PTC is useful as a way to calculate potential savings, there are numerous other factors for customers to consider in deciding whether they should continue to receive default generation/commodity service from their distribution companies or should contract with a supplier. These factors include source of supply (for example, green or renewable power), length of contract, cancellation fees, and special offers or deals. Many suppliers offer variable as well as fixed rates, so a direct comparison may be difficult. Both the PUC and the OCA provides lists of questions to ask potential suppliers, such as price and contract terms, whether taxes are included, penalties for switching, etc. It is important to remember that while the PUC sets distribution rates and default service rates, it does not regulate prices charged by gas and electric suppliers.

Shopping guides (including charts containing specific supplier information) can be found on the PUC’s website, specifically, PaPowerSwitch for electric service and PaGasSwitch for gas service, or at the OCA’S website.

Prior to signing a utility contract that includes a fee for early cancellation, or if you want to begin to operate as an electric or gas supplier, an attorney who has experience in regulatory authority should be consulted to properly advise you through out the process.

For questions, comments or additional information, please contact Margie Morris or Marci Chestnut, members of our Utility Group, at 215.495.6500.