Tuesday, July 10, 2012

PA Electric Generation Rates Back To 1996 Levels, Thanks To Competition & Shale Gas

As a result of competition and shale gas, today's electric generation prices across Pennsylvania are astonishingly low. How low?

Well, how many goods or services are back to 1996 prices?  Not college tuition, health insurance, postage, water rates, sewer rates, cable television charges.  Not milk, bread, corn, wheat, oil, silver, gold.

But electric generation charges are back to 1996 levels for most Pennsylvanians. In inflation adjusted or constant dollars, many residential customers are paying approximately 40% less. Astonishing!

The year 1996 was when Pennsylvania ended the state-granted electric generation monopoly by passing the Electricity Competition and Customer Choice Act.  When the Pennsylvania Public Utility Commission implemented the law and unbundled the 1996 monopoly electricity generation rate into its generation and distribution segments, the amount PECO's residential customers were paying for electricity was 8.6 cents per kilowatt-hour; Duquesne Light customers, in the Pittsburgh region, paid 8.8 cents per kwh; PPL customers throughout central Pennsylvania paid 6.6 cents per kilowatt-hour for generation service.

Today, PECO's residential customers in the Philadelphia area have generation prices of 7.4 to 8.64 cents per kilowatt-hour.  The savings can be as high as 57% in constant dollars, when compared to 1996 generation rate of 8.6 cents per kwh.  And that savings calculation does not count, the 50% off introductory offer, or 4.4 cents per kwh through October, from First Energy Solutions.

On the other side of the Commonwealth, residential customers in the Pittsburgh area of Duquesne Light are paying from 6.8 cents to 9.8 cents per kilowatt-hour for electric generation service.  Those customers who have switched to the lowest priced competitive offer have saved approximately 62% in constant dollars, compared to the 1996 generation rate of 8.8 cents per kwh.  Again, that savings calculation does not include the 50% off introductory offer of 3.8 cents per kwh from First Energy Solutions.

In the PPL service territory that serves Allentown, Scranton, Harrisburg, and large parts of central Pennsylvania, residential customers are paying from 6 cents to 7.99 cents per kwh.  Those customers who have switched to the lowest priced offer are saving about 50%, when compared to the PPL 1996 generation rate.

Competition is also providing consumers with a variety of service plans. For example, Direct Energy is also offering a free-day-of-power service plan that has allowed PPL customers to cut their electricity bills by 30% to 50%.

Savings for commercial class customers like coffee shops, restaurants, beauty salons, big box stores are even bigger than the 40% plus savings of most residential customers.

The combination of booming shale gas production and ending the generation monopoly and allowing competitive electric suppliers to compete for customers yields extraordinary savings for Pennsylvania's electricity consumers.  As a result, unlike most products and services, electricity costs much, much less today than 16 years ago.


  1. Hi, John You posted wrong link. Must have been editing something. Thanks for the blog.

  2. Thanks for the correction. I will fix it tomorrow as I am traveling and probaly unable to fix it today. Thanks again.