Electricity rates on rise, but there are ways to combat higher costs

Electricity bills in Pennsylvania are increasing sharply this summer, driven in large part by a tight market for natural gas, industry experts say.

The boost in electric rates has come as air ­conditioning units are cranked up for the summer.

That makes it a good time for Pennsylvania residents to explore online tools that can help them determine whether they could save money by switching the company that supplies their electricity.

“The vast majority of electricity is generated by the burning of natural gas — on the wholesale energy market, where all of our utilities get their electricity,” said Pennsylvania Consumer Advocate Patrick Cicero. “When the natural gas price increases, it has a direct effect on the price of electricity, and natural gas prices are up right now.”

With the U.S. shipping more liquefied gas overseas as a result of the war in Ukraine, the natural gas supply has not kept up with demand, Cicero said.

“Like most Pennsylvanians, I am concerned with the impact that rising energy prices have on consumers’ ability to afford their electricity bills,” he said. “The wholesale marketplace where all the utilities are going is high, and it’s going to remain high at least for the rest of this calendar year.”

PTC adjusted several times a year

According to the Pennsylvania Public Utility Commission, default service rates for residential consumers who don’t shop for a specific competitive electricity supplier jumped by as much as 45% last month.

Utilities typically adjust that default service price, or Price to Compare (PTC), either twice a year or quarterly. The PTC includes costs for generating electricity and transmitting it to the local utility’s distribution system and accounts for between 40% and 60% of a consumer’s total electricity bill, depending on the utility and the consumer’s power usage.

“The other part of your bill goes to your utility to maintain the poles, the wires and the infrastructure that get the energy to your home or your business,” PUC spokesman Nils Hagen-Frederiksen said. “Those rates stay constant for years at a time,” triggering a lengthy investigation by the PUC if a utility wants to make a change.

West Penn Power’s PTC increased as of June 1 by 44.6%, up from 5.67 cents per kilowatt-hour to 8.2 cents. That means the utility’s typical residential customer using 750 kilowatt-hours of electricity will see their monthly bill rise from $74.91 to $93.89 — an overall increase of about 25%.

West Penn Power spokesman Todd Meyers said the increase should be reflected in July bills for customers who don’t shop independently for an electricity supplier.

“The Price to Compare increased due to increases in the cost of natural gas and other commodities used as fuel to generate power,” said Will Boye, spokesman for West Penn Power parent FirstEnergy. “We purchase electricity through a competitive auction process and do not profit when the Price to Compare increases due to higher purchased power costs.”

The utility’s PTC will be subject to adjustment again Sept. 1.

Hagen-Frederiksen said it is too soon to speculate what may happen with PTC figures in September. “When we have a clear idea what those energy prices are going to be, we will reach out to consumers,” he said.

West Penn Power’s June 1 price is in line with or cheaper than rates charged by many other utilities operating in the state. MetEd’s new PTC is about 7.9 cents per kilowatt-hour, representing a 16% increase, while PPL’s rate is up by about 38%, from 8.9 cents per kilowatt-hour to 12.3 cents.

For Duquesne Light customers, a range of three PTC rates has increased by a little more than 17%, to 9.36 cents per kilowatt-hour for standard residential service and respective rates of 8.23 cents and 8.87 cents for homes where electricity is the primary energy source for space heating and for homes that have an add-on heat pump.

Duquesne Light won’t adjust its PTC rates again until December.

The company “competitively bids the energy supplied through the default service rate to secure the best prices possible for customers,” spokeswoman Ashley Macik said. “DLC encourages customers to evaluate all options when it comes to the supply portion of their bill.”

Seeking a supplier

Looking for a competitive electricity supplier instead of relying on the default price offered by the utility is one option consumers can explore to seek savings.

“Folks need to be careful to make sure that they know the product terms, fees and variability of their energy contract if they choose to shop for an alternative (electricity) provider,” Cicero said.

According to the PUC, competitive suppliers must provide customers an easy-to-read, one-page summary of the electricity contract.

Cicero suggests consumers mark the end of the contract on their calendar so they have ample time to weigh electricity supply options before that date arrives.

He also recommended using online tools at either of two state websites when comparison shopping for electricity.

More than 100 licensed suppliers are listed at papowerswitch.com, the PUC’s official site for comparing electricity prices.

Saving just one cent per kilowatt-hour could translate to more than $100 a year in savings, depending on power usage, the PUC notes.

The Pennsylvania Office of Consumer Advocate also offers online resources for comparing electricity suppliers at oca.pa.gov/electric-shopping-guide.

There are third-party consultants that might offer to help consumers sort through offers from electricity suppliers. Authorities urge caution when customers actually pay their electricity bills through a third party; consultants that provide that service must be licensed by the PUC.

As an alternative to comparing competitive supplier offers, residential electricity consumers may check with their utility to see if they can sign up for a standard offer program. If so, the consumer will receive a fixed rate for one year at a 7% discount from the utility’s Price to Compare.

According to the PUC, the standard offer is “a win-win for the electric shopper and supplier alike. The customer wins with potential savings on electric generation over the course of a year, with little or no risk, while the supplier gains a new customer now actively participating in the competitive market.”

Consumers also may want to consider whether a supplier offers a time-of-use program, charging a lower rate for electricity that is used during off-peak hours, typically between 9 p.m. and 9 a.m. Shifting laundry or dishwasher loads to those hours can result in a savings under such a program.

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This article originally appeared on Erie Times-News: Electricity rates on rise, but there are ways to combat higher costs