Consumer 10.0: Time to choose draws near

What happens to my wind-energy charges? Can I still get a winter discount for electric heat? Could I get signed up by trickery with a Peco Energy competitor - like "slamming" in the telephone industry?

The disappearance on Jan. 1 of Peco Energy Co.'s long-lasting price caps, coupled with a flurry of direct-mail and phone pitches from alternative suppliers, has left many Philadelphia-area residents anxious about the new choices they face over electricity.

Last week, I told you why it was once again time to pay attention to a topic - the deregulation of Pennsylvania's power-generation industry - that you may have reasonably tuned out a decade ago.

Like it or not, electricity competition is upon us. Peco will still be your "poles and wires" utility - it will deliver your power, bill you for it, and answer trouble calls. But after New Year's, those comforting rate caps will vanish for Peco's 1.3 million residential customers. As a result, you'll be more exposed to the market price of power - and thus to market risks and opportunities - than ever before.

If you tune out and don't do anything, nothing awful will happen. You'll remain a customer of Peco's so-called default service. Every three months, Peco will make deals for power and adjust the price it passes along to you accordingly. You'll essentially be billed a "commodity price" for electricity that Peco will adjust every three months, just as it and the Philadelphia Gas Works make quarterly adjustments in the commodity price they charge you for natural gas.

The good news is that Peco has finished its power-buying deals for the first quarter of 2011, and prices have actually ticked down, not up - despite years of warnings that the cap expirations would bring skyrocketing rates. Some credit is plainly due to the emerging competitive markets for power, but you can also thank the recession, conservation, and the abundance of natural gas for helping to keep prices in check.

Next month's transition won't be completely painless. Peco customers can expect to pay about 5 percent more for electricity starting Jan. 1 because of increases in the flat monthly service charge and in delivery rates - parts of your bill that are still regulated by the Public Utility Commission, which gave its final approval last week to those increases.

That equals about $6 a month for the median Peco customer who uses about 750 kilowatt-hours per month, says spokeswoman Cathy Engel.

But here's another bit of good news for most customers: If you shop for an alternative supplier now, you can lock in a generation price for the next year that will more than offset that increase by saving you a penny per kilowatt-hour vs. Peco's "price to compare" of 9.92 cents - worth about $90 a year to that median customer. You can even buy 100 percent renewable energy at a discount off Peco's price.

I use electric heat. Can I save? That's a question raised repeatedly by readers such as Chip Dascanio, who owns an all-electric house in Paoli and who is among Peco's 160,000 customers who benefit from a special "RH" residential-heating rate: a discount that dates to an era when Peco was building new power plants and wanted heating customers to boost winter's otherwise sluggish demand.

Dascanio used nearly 19,000 kilowatt-hours last year, more than twice Peco's median, and would welcome any savings. But for now, he should plainly stay put. So far, no other supplier is competing with Peco's RH rate, which offers a discount of nearly 50 percent for winter usage above 600 kilowatt-hours per month.

That discount remains in effect through 2011. But it will be phased out starting in 2012 and 2013 - it will be sliced by half each year and will end in 2014 - so electric-heat customers should watch for alternative offers next fall.

One avenue for innovation rests on the fact that, though you may pay a flat rate for electricity, your supplier's power costs can vary dramatically from hour to hour and day to day. With the new "smart meters" Peco will begin installing in 2012, heating customers could save by shifting more demand to off-peak hours - an option Peco plans to make available to nonheating customers as well.

For that same reason, another possibility is that even before smart meters are widespread, alternative suppliers will study electric-heat usage patterns and decide they can offer something similar to the RH discount.

"There will be options for these customers," Engel promises.

I already have an 'off-peak' meter. What happens to that? Peco's special "OP rate" discount, typically used by customers with electric water heaters, will also be phased out by 2014. By then, alternative off-peak options should be widely available. Look at your bill and do the math to see whether you'll save with an alternative supplier.

What happens to my 'wind energy service charge'? Nothing, unless you drop out of the program - even if you switch suppliers and buy all-renewable energy.

Those Peco wind charges are part of a special program in which customers pay for "blocks" of wind power - $2.54 per 100 kilowatt-hours. In other words, you agree to pay Peco $7.62 a month, and Peco agrees to purchase 300 kilowatt-hours of wind power.

Unless you cancel, the charge will stay on your bill - not necessarily a bad thing if you want to support wind power. But you can also do so by switching to a green alternative supplier.

Is 'slamming' possible? Unfortunately, yes. "Slamming" is the name for unauthorized switches from one supplier to another. It's become familiar because of phone customers who are unknowingly switched to an alternative local or long-distance provider.

Electricity slamming has been reported in New York, Texas, and Canada, so it can happen here. Your main protection: Watch your bills carefully and report anything suspicious to Peco and the PUC.

I live in New Jersey - can I switch? Yes, New Jersey has electricity competition, though the state hasn't promoted its availability as enthusiastically as Pennsylvania. For information and links to suppliers in your area, go to http://go.philly.com/njpowershop

Can I save more than a penny per kilowatt-hour? It's possible, but buyer beware. Pennsylvania suppliers have offered variable-rate savings as high as 21/2 cents per kilowatt-hour, but "variable" means without a price guarantee. Watch out, too, for cancellation fees and other fine-print terms.

It's also possible that you'll save more than a penny this summer simply by locking in a fixed rate for a year. Not only might Peco's quarterly rate have risen, but you'll dodge the full effect of so-called inverted block rates. As air-conditioning demand pushes up power prices, Peco charges a premium for usage above 500 kilowatt-hours per month. Alternative suppliers could do the same, but so far none are offering such rates.

Of course, you can also save by taking advantage of Peco rebates for conservation, including discounts on compact-fluorescent bulbs. Peco also offers incentives for replacing old refrigerators, like the ones people buy to keep extra beer, says Consumer Advocate Irwin A. "Sonny" Popowsky.

"That second refrigerator can add more than $100 a year on your electric bills, which makes it the most expensive six-pack of beer you have ever bought," he says. For more information on rebates, go to www.pecosmartideas.com

Pennsylvania's market rules make it easy to shop for electricity.

Pennsylvania's Public Utility Commission explains electric choice and lists alternative suppliers at http://www.papowerswitch.com

The Pennsylvania Office of Consumer Advocate offers a shopping guide at www.oca.state.pa.us

Don't have Web access? Call 1-800-684-6560 and ask to be mailed a copy.

New Jersey residents can visit http://go.philly.com/njpowershop

The PUC offers a primer on understanding your Peco electric bill at http://go.philly.com/pecobill

Peco Energy Co. responds to customer questions at http://www.pecoanswers.com

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