As Peco shifts into market-based rates at the end of the month, at least 17 suppliers are offering discounts of 10 percent and more to residential customers for electricity supply. Even more suppliers are targeting commercial and industrial customers.
They are able to undercut Peco's default price because they are unhindered by the one-size-fits-all pricing that Peco must offer and can more nimbly navigate electricity markets, where prices shift by the hour and the season.
"Alternative suppliers could be buying for a different profile, a smaller audience," said Cathy Engel, Peco's spokeswoman.
Under Pennsylvania's Electric Choice Act, which is being fully implemented Jan. 1 after a 14-year transition period, Peco and other traditional utility companies became solely distributors of power - "wire companies." New Jersey and Delaware have undergone similar transitions.
Though billing and customer service will still be handled by the wire companies, customers are free to choose a supplier that generates the power, which accounts for about two-thirds of a residential bill. The remainder of the bill is Peco's distribution charge.
For customers who do not want to shop, the Pennsylvania Public Utility Commission requires Peco to provide basic generation service. For residential customers, Peco's 2011 "price to compare" is 9.92 cents per kilowatt-hour. It's also called the "default rate" because that is the price customers will get if they do nothing.
Discounters are enticing residential customers with offers of about a penny less than Peco's rate, saving the typical homeowner about $90 a year.
Robert F. Powelson, a PUC commissioner from Chester County, said some customers are reluctant to switch because they are worried that utilities will lose money and punish customers who defect. But utilities such as Peco make their profits from the distribution charge, not from power generation, and Peco is telling customers it doesn't care who supplies the power.
