Competition could bring cheaper electricity to Pennsylvanians

By Kim Leonard

Tuesday, May 25, 2010


Customers of Duquesne Light and Allegheny Power could start to hear in coming months from competitors who want to sell them cheaper electricity.

Direct Energy is eyeing Duquesne Light's residential service territory in Allegheny and Beaver counties, for instance, especially because the utility just last week finalized its price for household power through May 2013.

"We're actively looking at the Duquesne market, and will be making a decision soon," said Ron Cerniglia, director of national advocacy for Downtown-based Direct Energy.

In Allegheny Power's area, covering much of the rest of Western Pennsylvania, longtime Duquesne Light competitor Dominion Energy Solutions of the North Side is sizing up the residential customer base. That Greensburg-based utility's capped prices for electricity will expire Dec. 31.

"We are preparing to be one of the marketers in the Allegheny Power territory," Dominion spokesman Dan Donovan said.

Homeowners have been able to buy electricity from the local utility or from another supplier since 1999 under the state's deregulation law, but a strong market never developed. Energy suppliers came and went in some parts of the state, and few of them pursued residential business for long.

The state Public Utility Commission has broadened its efforts to change that by:

Pressing utilities to offer better incentives to alternate suppliers to enter a market. One incentive is to buy up the competing suppliers' billings at a slightly discounted rate so they won't have to set up and invest in their own collection departments.

Working with utilities to teach customers why and how they should "shop" for electricity. Examples are the new Web site and events earlier this month in Hershey and Lancaster that drew a total 900 customers of PPL Electric Utilities Corp.

PPL raised its residential prices by 30 percent in January after its rate caps expired. Since then more than 420,000 residential customers, or about 30 percent of the total, stopped buying power from the Allentown-based utility.

Twelve competitors are vying for residential customers in PPL's central and northeastern Pennsylvania territory. Terms vary, but the lowest price undercuts PPL's $72.80 bill for a customer using 700 kilowatt hours a month by more than $10.

Donovan said Dominion has signed up 230,000 PPL customers for its fixed-price offer that runs through Dec. 31.

Timing was key in creating the PPL power marketplace. The utility bought a portion of the electricity it supplies to customers this year back in 2008, when energy prices were at historic highs.

"So it was relatively easy for the marketers to come in and beat PPL's price" with electricity bought later, at lower rates, said state Consumer Advocate Sonny Popowsky.

Duquesne Light, by contrast, said last week its customers will pay 5.1 percent more for power starting Jan. 1 -- at a rate that will run through May 2013. Greensburg-based Allegheny Power said its prices are shaping up to be about 4.1 percent higher, starting in January.

Popowsky doesn't expect anything like PPL's switching frenzy to unfold in Western Pennsylvania. "There's nothing really wrong with that, as long as people are getting a good price," he said.

In some cases, competing offers have unique twists.

Energy Plus Holdings, which has a variable price offer for Duquesne Light customers, has a product that includes US Airways frequent flier miles. The 3-year-old, Philadelphia-based company plans further expansion in Pennsylvania this year, said President Kevin Kleinschmidt, who won't disclose how many customers his company serves.

Also, people who work at stores or other businesses in PPL territory that are supplied by Direct Energy can sign up with it for lower-priced power at home. That's if their employers belong to local chambers of commerce served by ChamberChoice, a benefits consultant based in Pine.

The deal started in February. "The last number I had was about 650 customers," ChamberChoice President Sam Weber said, adding the offer prices electricity at about 16 percent below PPL's rates.

FirstEnergy Solutions has about 10,000 customers in Pennsylvania Power Co.'s service area, and plans new offers soon that will discount power for some residential customers, based on their usage levels, spokeswoman Diane Francis said. Penn Power, like FirstEnergy Solutions, is a subsidiary of FirstEnergy Corp. of Akron, Ohio.

David Hughes of consumer advocacy group Citizen Power, in Squirrel Hill, warns utility customers to study the details of power supply offers.

Many offer only a few dollars a month in savings, hardly worth the trouble of switching, said Hughes, a longtime critic of deregulation. "This is not the robust competition we were promised when this started in the 1990s" and electric rate payers statewide paid $12 billion to restructure the state's utilities, he said.

Kim Leonard can be reached at or 412-380-5606.