Unlike other fixed-rate offers, which tend to demand higher prices for longer terms, FirstEnergy's seven-year rate is among the lowest on the market right now. At 7.5 cents per kilowatt hour (kWh), it is 28.6 percent less than Peco's current price of 10.5 cents per kWh.
"You get a good, low price that's not going to change for seven years," said Diane Francis, a spokeswoman for the company, which is based in Akron, Ohio. It is affiliated with FirstEnergy Corp., which owns 10 utilities, including four in Pennsylvania.
There's a catch for price certainty. The contract comes with the biggest cancellation fee on the market - $295 for customers who quit before the term expires (there's no early-cancellation penalty for customers who move before the seven years are up).
The FirstEnergy deal is the latest in a boggling menu of offers available to Peco customers, who can switch to competing energy suppliers. Peco continues to provide billing and customer service as the distribution company.
The Pennsylvania Public Utility Commission currently lists 46 suppliers for Peco customers on its website, papowerswitch.com. The offers include variable rates, fixed rates and green-energy options.
About 30 percent of Peco's 1.6 million customers have switched, and FirstEnergy hopes its long-term offer will appeal to customers who want to set-it-and-forget-it.
"We wanted to differentiate ourselves in the marketplace," said Francis.
Fixed-rate deals may be attractive right now to Peco customers who are about to be shocked with higher bills because of the utility's quarterly price adjustment. Peco's supply charge went up 21.5 percent on Monday. Peco says the rates will come back down to 8.81 cents per kWh on Jan. 1.
FirstEnergy Solutions says it can offer the price certainty because its parent company controls 20,000 megawatts of power-generation capacity and is looking to lock in long-term customers.
"Those plants are going to be around seven years from now," said Francis. About 64 percent of FirstEnergy's power comes from coal-fired plants.
Power prices currently are at record lows, so locking in for the long-term is similar to refinancing a mortgage when interest rates hit bottom. There's always a chance the rates could go lower, but it's more likely they will go up.
But by making a seven-year commitment, customers may be limiting their future options. Peco is currently installing smart meters that will allow suppliers to offer hourly pricing next year, which some customers may use to reduce their bills by shifting their discretionary electrical loads to off-peak hourly rates.
FirstEnergy introduced the seven-year pricing plan in Ohio with much fanfare this past summer, but it rolled out the offer in Pennsylvania without an announcement.
Francis said Ohio residents are just getting used to shopping for electricity and "we kind of have to be a little more in your face there."
Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at http://www.papowerswitch.com.
The Pennsylvania Office of Consumer Advocate will mail a free Peco shopping guide: 1-800-684-6560.
Peco Energy Co. explains its rates at http://www.peco.com/KNOW .
FirstEnergy Solutions: 1-888-254-6359
Contact Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or email@example.com.