Thursday, June 16, 2011

Electricity Competition: A Tale Of Service Territories & Customer Classes

While competition to supply large customers with electricity since rate caps ended everywhere on December 31, 2010 has been substantial across the Commonwealth, competition has waxed and waned for smaller customers or residential customers across Pennsylvania.

In the PECO service territory competition is waxing with as many as 30 companies competing to supply residential customers and more are fighting for large commercial and industrial accounts.  The Philadelphia Inquirer reports that Energetix and Constellation are two companies newly competing for residential accounts in the PECO service territory.

Savings in the PECO service territory can be considerable and both the Pennsylvania Public Utility Commission and the Pennsylvania Office of Consumer Advocate provide full residential shopping guides listing all offers.  Consumers can save money by shopping; can lock in longer term pricing; and can buy green power products of many descriptions.  I personally have switched to a 100% wind power product with the wind energy produced in Pennsylvania and our regional PJM power pool.

Energetix, the new entrant for example, is offering residential service at 8.95 cents while the PECO default rate is 10.42 cents per kilowatt-hour for the first 500 kilowatt-hour and 11.69 cents per kilowatt-hour for usage over 500 kilowatt-hours, while Constellation is offering a product that save customers up to 12% according to their product offering.

Yet in some service territories, competition for residential customers through May has been minimal, with just 1% of residential customers switching in the Metropolitan Edison, the Pennsylvania Electric, and the Allegheny Energy service territories.  In these service territories, about 99% of customers remain on Default Supply or purchasing electric generation service from their local distribution electric utility.

Steps need to be taken to boost competition in all parts of the Commonwealth.  More on this later.


  1. What can you tell us about Energetix offer of a replacement time-of-use rate for PECO OP and RH customers who will no longer have this tariff option by the end of 2012, as PECO phases it out?

    Are there any 15-minute-increment spot market time-of-use rates on the horizon for residential customers? How aggressive will the market be, in offering niche rates for residential and small-business customers of all stripes? What are the barriers to entry for small brokers getting into this business and filling gaps for very-small customer pools? (IE: what are the basic regulatory and reliability and financial stability requirements for a 3rd-party energy marketer? Where can I get this info?).

    I'd like to link customers to more alternative energy and alternative rate information, from my site at

  2. The main barrier to entry is metering. That should not be a problem in the PECO territory as PECO is installing meters capable of providing customers real time billing options.

    Another barrier to entry is often regulatory limitations. Again in Pennsylvania, with the Public Utility Commission supportive of real time billing options, regulatory opposition is not a problem.

    I would expect several companies to compete for the large number of customers on rate OP in PECO. The large number of customers makes the transaction costs of entry more viable.

    Sites with good product information on alternative energy include the Pennsylvania Office of Consumer Advocate's official electricity shopping guide. It is well done and updated regularly and the Choose PA Wind site at