Choosing renewable energy can now save money as well as power

Posted: December 27, 2010

Peco Energy electricity customers can now save money at the same time they're saving the planet.

At least seven power suppliers entering Peco's newly deregulated residential market are offering packages partly or entirely derived from renewable energy.

And at least two suppliers will provide 100 percent green power for less than Peco's basic generation service.

Discounted renewable power is a departure. Customers signing on to green options typically paid a premium.

"There's a virtuous momentum in the market that's developing," said John Hanger, secretary of Pennsylvania's Department of Environmental Protection.

As a member of the state Public Utility Commission in the 1990s, Hanger was one of the architects of electricity deregulation, which is coming into full force for Peco's 1.6 million customers after more than a decade of transition.

On Jan. 1, restrictions will be lifted that made Peco's territory unwelcome to alternative suppliers. Though Peco will distribute power and send out bills, customers are free to choose the company that generates their electricity.

Customers are not obligated to switch suppliers. Those who remain with Peco will accept a default rate known as "the price to compare." The rate is 9.92 cents per kilowatt-hour, a price that will be adjusted quarterly to reflect market changes.

At least 18 companies now are making offers to residential customers, some offering fixed rates, others offering rates that will vary from month to month. So far, more than 25,000 Peco customers have switched suppliers, according to Cathy Engel, the utility's spokeswoman.

The best fixed rates offered for a one-year term are about 8.9 cents per kilowatt-hour, roughly 10 percent below Peco's price to compare. A typical residential customer who uses 750 kilowatt-hours a month would save $90 a year.

Several suppliers, such as North American Power and Viridian Energy, are offering discount supplies that derive part of their energy from renewable sources, such as wind generators or solar farms. Their offers are variable rates.

But at least two suppliers are offering 100 percent renewable power at fixed prices for one year: BlueStar Energy Solutions, an Illinois supplier, is offering 9.348 cents per kilowatt-hour - almost 6 percent less than Peco's default rate. And the Energy Cooperative Association of Pennsylvania, a nonprofit group, is offering 9.79 cents per kilowatt-hour.

Both rates have conditions. BlueStar will assess a cancellation fee for customers who opt out early - $10 for each month left in the contract. And the Energy Cooperative requires a $15 annual membership fee.

But the offers are significant. In the past, customers who signed up for Peco Wind or one of several add-on suppliers were assessed an extra charge of 2.5 cents per kilowatt-hour. In the current market, those surcharges seem hefty.

Kerry Breitbart, president of North American Power, said the wholesale price of renewable power has been coming down nationwide, partly because of the recession.

"We offer a unique opportunity in Peco right now to go green and keep your bill the same, or even pay less than you were previously paying with Peco for traditional energy," he said.

The DEP's Hanger, who lauded the public-health and environmental benefits of nonfossil fuels, said he anticipated renewable power could get even more competitive.

"The cost of renewables is declining, and the cost of the premium is going down," he said.

Even customers who do not choose a green-energy option have a small stake in the renewables market.

Under Pennsylvania's Alternative Energy Portfolio Standard, 3.5 percent of all power supplied in 2011 must come from renewable sources.

The mandate, which applies to all suppliers, increases by one-half a percentage point each year. By 2020, 8 percent of all electrical power will be renewable.

Peco says the cost of meeting the renewable-power standard in 2011 adds about 0.6 percent to its default price, or about 45 cents per month for a customer that uses 750 kilowatt-hours.

Power Shopping

Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at

The state Office of Consumer Advocate will mail a Peco shopping guide free. Call 1-800-684-6560.

Peco Energy responds to customer questions at

Contact staff writer Andrew Maykuth at 215-854-2947 or

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