PENNSYLVANIA ELECTRIC SUPPLIER CHOICE PRIMER
Commercial Utility Consultants (CUC) is pleased to provide you with a “deregulation primer” to assist you in understanding electric customer choice and how it will affect utility costs for your facilities. Although many of the items here are specific to electric deregulation being implemented in Pennsylvania, most items are applicable to activities underway in other states as well.
Electric Distribution Company (EDC)
Also referred to as the “wires” company, this is a subsidiary of your traditional electric utility having connected to your building. The names are familiar: PECO, PP&L Inc., Duquesne Light, etc. They are responsible for basic delivery of electric power to your facility, plus line maintenance, service restoration, meter reading, service upgrades, connection/disconnection etc.
Electric Generation Supplier (EGS)
Also referred to as the alternate supplier, the EGS provides generation (capacity and energy) and (in most cases) transmission service to the EDC’s system for delivery to your facility. An EGS can be a broker, marketer, aggregator or generator. EGS customer charges are not regulated, as they would be if the service was provided by the EDC. Many EGS companies are unregulated subsidiaries of utility holding companies that also have EDC subsidiaries. The EGS must be licensed by the PA Public Utility Commission to do business in Pennsylvania; however the EGS prices and individual contracts with customers are not subject to regulatory approval as they would be with an EDC.
Unbundling of Electric Services
The PA deregulation legislation required electric utilities to “unbundle” their charges into four component charges – distribution, transition, generation and transmission. A full service (PLR) customer of an EDC receives all four charges on their EDC bill.
Billing Cycle
The period extending from one meter reading to the next. Typically one month in length, most utilities consider a standard billing cycle to be a range of days, such as 26-35 days.
Tariff Rates
These are the electric rates charged by the EDC that are regulated by the PA Public Utility Commissio
One-bill Option
The EDC will include EGS charges on their bill if the customer wishes and the EGS provides for this capability. With the one-bill option, EGS charges will appear in a separate section on the EDC bill and in most cases the name of the alternate supplier will be referenced.
Two-bill Option
For each utility service, if an alternate generation supplier is selected, two bills will be rendered. One bill will be from the EDC for distribution and transition charges; another bill will be rendered by the EGS for generation and transmission charges.
Date of Supply
The meter reading date when the EGS begins supply of their service. Due to startup problems associated with data transfer between EGS and EDC companies, many delays in service have been experienced, and the expected date of supply may not have been met.
Load Factor
The load factor is the ratio of average KW load to peak KW load as measured by the utility’s meter. Average KW is determined by taking the total KWH used and dividing by hours in the billing cycle. Peak KW as metered by the utility is the highest KW used any one of the metering intervals for the billing cycle. A high load factor signified an electric user that has high hours use of peak demand (like a 3-shift manufacturer or computer data center), while a low load factor is indicative of low hours use of peak demand such as a church, small office building or one-shift industrial operation. In most cases, a high load factor will result in lower pricing from suppliers.
Electric Commodity Price
Electricity is now considered a commodity similar to natural gas, and as such is subject to market forces at the retail level. Alternate suppliers keep a keen eye on the commodity price of electricity; weather and plant availability may have a significant effect on market prices. Price quotes for generation service in an unregulated market will change routinely. There are many factors that need to be considered when choosing a supplier for electricity. We welcome the opportunity to assist you with this effort.
