June 1 was more than the start of a new month. If you are an electricity customer in Central or Western Pennsylvania, that day also marked a substantial hike in prices: anywhere from 20 percent to 50 percent if you buy from the utility. You’ll see these prices in your next billing cycle.
Why the price hike?
The utilities in that footprint, namely Metropolitan Edison, Penelec, Penn Power and West Penn Power, don’t generate their own power anymore. They have to buy it on the open market, just like competitive suppliers do. If you buy your electricity supply from the utility, you are paying what is called the default Price to Compare (PTC). (You can find this PTC on your bill, under the itemized charges.) The utilities change this PTC every three months, so every three months you can track on your bill how the rate has changed. The most recent rate change for both residential and commercial customers was on June 1.
In states, including Pennsylvania, that have deregulated the power industry and have unbundled prices, you can choose your supplier. Energy purchasing is much like TV or phone service. Just as you can choose ATT or Verizon for your phone service or the local cable company or Dish Network for TV, you can also choose who you buy your energy from. No matter who you buy from, though, the utility will still deliver the energy and will still maintain the power lines. Thanks to competition, you can shop around for a supplier to find an offer you like.
If you remain with the electric utility, though, you’ll be facing a “shock” when you open your June bill. Scheduled increases across the four utilities are:
• Met-Ed: 25 percent
• Penelec: 20 percent
• Penn Power: 30 percent
• West Penn Power: 50 percent residential
There are more than 2 million customers across the state who haven’t taken advantage of energy competition. If you are one of them, be ready to write a larger check. Remember, too, now that we’re going in to the summer cooling season, that three-month PTC means that those hikes will stay through July and August, the months with the hottest weather and highest air conditioning use. The more you want to keep cool, the more you are going to have to pay.
Now would be a perfect time for smart shoppers to take advantage of their ability to choose and compare prices. When shopping, keep in mind that now may also be the perfect time for a fixed price offer, which offers you price protection for the duration of your contract.
Look for the silver lining in the utilities’ announcement: shop and you may end up saving.