After enjoying record level low electricity prices for the past year and a half, residential customers serviced by Commonwealth Edison (ComEd) are facing a huge electric rate hike that went into effect on June 1, 2014. For some consumers the rate hike is more than 50% as the ComEd default rate has jumped from below 5 cents to, in some cases, just above 8 cents. The price hike will effect all residential ComEd consumers who are on the “Price to Compare” rate structure, which is the price consumers pay for generation and transmission service who have not shopped for an alternative solution.
The large price increase by ComEd has resurrected competitive electricity rate offers that can produce savings. During the last year and a half, Illinois electricity suppliers found it difficult to offer rate plans that could show savings versus the ComEd price to compare. Instead they focused on promotional incentives and longer term price protection contracts in order to gain new customers. With high ComEd rates accompanied by low wholesale prices, ComEd energy choice can once again provide fixed electric rates that are lower than the default prices and thus offer clean cut savings on the ComEd electric bill.
Finding a low electricity rate offered by a electricity supplier who is licensed by the Illinois Commerce Commission can result in lower monthly ComEd electric bills.
Power companies who have taken notice to the success of electric choice in Pennsylvania’s largest cities are now targeting the smaller towns by offering competitive rates and instant bill savings. The Metropolitan Edison Company is the fourth largest electric utility in the state of Pennsylvania delivering power to more than 550,000 power users, all of whom are outside of Philadelphia and Pittsburgh. Meted customers have seen a surge in electricity competitive rate offers as power companies continue to enter the area looking for new customers.
The competitive power companies have been successful in their marketing efforts to Meted customers. Over the last year the residential switch percentage, the number of customers who are purchasing their power from a competitive supplier in relation to the total number of Meted residential customers, has surged to 35.9% as reported by the Pennsylvania Public Utility Commission. The Meted switch rate is actually higher than the 32% switch rate of Pennsylvania’s largest electric utility, PECO Energy, where power companies have spent more efforts on gaining customers.
Residential customers in the Meted service area are learning that can save money on their monthly Meted electric bills by shopping for competitive low electric rates. Customers who do not shop for competitive rates pay a default electric rate through Meted. Though the Meted default rate recently went down, competitive rates in the area still remain lower. The majority of power companies offering service to Meted customers offer consolidated billing which means that the customer continue to receive the same familiar electric bill from Meted even after they switch.
A list of some of the more competitive rate offerings for Meted residential customers is below. Rate offers are updated daily.
Electricity choice is pushing prices down for the majority of residences in Ohio. Several years ago Ohio passed energy restructuring laws that allowed for competitive electricity in the state’s largest utility service areas. Those laws are now paying dividends as the number of electricity companies offering service in Ohio is increasing, as well as the number of participating energy shoppers.
The biggest electricity service area in Ohio is AEP, which includes Ohio Power and Columbus Southern Power. The utility serves over one million residential electricity customers, of which 25% are currently buying their power from a competitive energy supplier. Those who have taken the time to compare AEP Ohio electricity prices have been able to substantially reduce their electric bills. The savings have been significant reaching as high as 17% versus the AEP Ohio price to compare default rate.
As the Ohio electricity choice market continues to mature consumers can expect to see falling prices. The state is seeing the number of energy companies offering service to Ohio residences increase, giving customers more product options and lower rates. The switch percentage is above 70% for some of Ohio’s service utility areas, showing that the people of Ohio have accepted and welcomed electricity choice.
Below are competitive rates for Ohio Power and Columbus Southern Power, all prices are updated daily.
In discussing the best time to lock in fixed business electricity rate contracts, there is a wide misconception that fixed electricity rates go down during the fall and spring season of the year. While recent historical data may lead one to believe this may be the case, following this to an end in itself is a fallacy and can cost businesses money as they sit around and wait for prices to potentially fall.
Fixed electricity pricing is based on future forward contracts. With natural gas being a significant source of electricity generation in Pennsylvania, fixed rates are highly correlated with natural gas future contracts. This means that when you look to lock in a two year fixed electricity price, the forward natural gas prices for the next 24 months have an effect on the final fixed price for power. Every month included in the duration of the contract will have a set rate the moment the contract is signed. The final fixed price will be the weighted average of the estimated amount of electricity a business is expected to use for a given month times the rate. This means if a Pennsylvania business customer decides to lock in a fixed commercial electricity rate in the middle of summer the price will take into account the cooler months that come along with the fall and spring seasons.
Locking in a fixed rate will protect Pennsylvania business customers from the volatility associated with the energy market. The fixed rate will put a ceiling on the price if the market were to rise during the term of the contract. If the market were to drop you are not necessarily stuck with having to pay a higher rate. More and more electricity suppliers are offering the blend and extend option in Pennsylvania. This allows a business electricity customer on a fixed rate product to immediately lower their rate at any point during the term of the contract in return of extending out the contract. Exercising this option will maximize the savings for the initial term of the agreement while extending out protection against the risk of a potential rise in future energy prices.
Fixed rates are the most common rate structure for those looking to get off PPL, Met-Ed, or PECO’s high default rates. One appealing feature of fixed rates is the transparency in allowing a company to forecast their annual electricity expenditures. Those businesses still on the utility default rate will have to deal with large swings in costs when the electric bill comes due. Budget certainty is a great asset to have when dealing with a volatile market. With the blend and extend option in place, Pennsylvania business customers looking to sign a fixed rate may want to consider locking in a term for several years.