Jeff Gelles: Convert from electric heat - or not?

As long-term price caps were about to expire a year ago, Peco Energy customers learned that cheap and abundant natural gas was easing the pressure on power prices and sparing them some long-anticipated bad news.

Customers who chose competitive suppliers were able to save about a penny per kilowatt-hour, offsetting a simultaneous increase in Peco's electricity-distribution rates. Rather than rise 10 percent or more, as widely predicted, the Philadelphia region's overall power prices basically held steady or ticked down.

But there was one group of customers who saw a shadow approaching, and now it's at hand. Starting Jan. 1, Peco's 140,000 electric-heating customers will lose half of their special residential-heating rate - the "RH rate" - discount. Come Jan. 1, 2013, the RH discount will vanish entirely - at least from Peco.

Those customers don't have many options at the moment. So far, no competitive supplier has offered discounts to compete with what will be left of Peco's price break. Nor is it guaranteed that any will do so by 2013.

But with the clock beginning to wind down, RH customers have good reason to start evaluating what few options there are - including the possibility of making a final break with electric heat.

Though it may seem ironic to those who recall the era when Peco and other utilities promoted all-electric homes, Peco itself is now eager to help, including with incentives to help pay for converting. So is Philadelphia Gas Works.

Here's a quick rundown of the costs, benefits, and uncertainties if you take either path: sticking with electric heat or switching to gas.

Staying put. If you're staying with electric heat, warm yourself with this thought: You'll still have a deep-enough discount that none of the 40 competitive suppliers in Peco territory is even bothering to make you an offer.

Right now, Peco's RH customers pay 10.98 cents for their first 600 kWh per month - a threshold designed to reflect their nonheating uses. Above that during cold-weather months, they pay 6.01 cents per kWh, a discount of more than 45 percent.

Come Jan. 1, the price-to-compare for the first 600 kWh drops to 10.05 cents at the same time that the RH discount is cut in half. Above that, Peco's RH customers will pay 7.78 per kWh.

Peco spokeswoman Cathy Engel Menendez says the net result will add about 5 percent to the monthly bill of an average RH customer, who now pays about $184 per month on year-round budget billing for average use of about 1,600 kWh.