The president of Smith Village Home Furnishings, a family business in Jacobus, southern Pennsylvania, has signed up with NextEra Energy Services, one of dozens of new energy suppliers in the state, to get power at 8 cents a kilowatt hour for 24 months, saving him 8% compared with power from his old supplier, the utility Met-Ed.
Smith told a hearing of the state’s Public Utility Commission on March 21 that he had been approached by different suppliers over the last two years, and selected NextEra after taking advice from the local chamber of commerce which is educating businesses about the benefits of electric deregulation.
The Switch is Catching On
The furniture company is among the 36 percent of Pennsylvania businesses that have so far switched electricity suppliers in search of lower rates or services such as renewable power since the state began deregulating its markets.
Another beneficiary is North Penn School District outside Philadelphia, which negotiated a rate cut to 12 cents/kWh from around 15 cents and, combined with energy-saving measures, cut its electric bill by $175,000 in 2011, Thomas Schneider, the district’s Manager of Energy and Operational Efficiencies, told the hearing.
After removing the last of its rate caps in December 2010, Pennsylvania is now seeking to build on its reforms and persuade many more residents and businesses to take advantage of the lower rates and different services offered by new entrants, in an initiative that’s being watched by other states.
Pennsylvania will become the most competitive marketplace in North America
“From the viewpoint of competitive suppliers, Pennsylvania will become the most competitive marketplace in North America,” said Ron Cerniglia, Director of National Advocacy, Government and Regulatory Affairs for Direct Energy, a leading energy retailer.
By March 21, 28.6 percent of the state’s residential customers, or about 1.6 million, had switched their electric supplier, with rates varying widely between zero and 68 percent in the state’s nine utility service areas, according to the PUC’s consumer website, papowerswitch.com.
Regulators are seeking to overcome public indifference, confusion or misunderstanding about switching and are looking for ways of funding an advertising campaign to sharply increase the number of people who are willing to shop for a new supplier.
Cerniglia said a charge of $1 a year per customer would pay for a campaign to promote the advantages of switching. Another possible source of funding would be to share the cost between utilities and the new suppliers, he said.
Some Customers Are Getting “Slammed”
While more competition has cut rates for many customers, it has also produced a recent surge in “slamming” in which some customers are connected to new suppliers without their knowledge or consent, according to John Bodine, Vice President of Business Development and Sales at OnDemand Energy Solutions, which manages power supply and demand for commercial clients in the PJM area.
He said about 50 small business customers have complained about the practice in the last few months after being approached by “pushy” telemarketers, mostly on behalf of one company.
“Without signing anything or agreeing to anything, they were switched to another third-party supplier,” Bodine said.
The hearing was the last in the PUC’s Retail Markets Investigation. After submissions from generators, distribution companies, utilities, and consumer advocates, PUC staff are expected to prepare final recommendations for the commission by late April.
For more about electricity market deregulation on Breaking Energy, read here
Chairman Robert Powelson said comments from the hearing indicated top priorities included consumer education and the need to incorporate alternative energy portfolio standards and low-income energy programs into the final reform.
“We’ve got a tremendous workload ahead of us,” he said. “I don’t know of any jurisdiction that is taking the leap of faith we are.”