“What you are seeing are decreases because natural gas prices are lower,” said a spokesman for PECO, as the electric utility cut its default residential electric rate by another 14.7% effective July. For the typical residential customer that has not switched to a competitive electric supplier, the latest rate cuts in 2012 add up to $115 of additional savings per year. Customers who have shopped for electricity and switched to a competitive electric supplier can save another 10% or more.
A total of 451,000 of PECO’s 1.6 million customers, including half of commercial and 87% of industrial accounts, have switched to competitive electric suppliers.
For customers that have not shopped, PECO’s residential generation rate is now 8.64 cents per kilowatt-hour. That is almost exactly what PECO’s generation rate was in 1996, sixteen years ago, when the Pennsylvania Public Utility Commission unbundled or separated the total electric rate into distribution and generation parts. Today’s generation price, or the charge for producing the electricity itself, is more than 40% lower in inflation adjusted or constant dollars than the 1996 generation rate.
To make matters better for the customers of PECO, competitive electric suppliers have offers that are much lower than the PECO default rate. Competitors are offering electricity for as low as 7.4 cents per kwh. First Energy Solutions has an introductory offer of 50% off or 4.4 cents per kwh through October 2012 and then a fixed 8.8 cents through December 2013. That offer comes with a hefty cancellation fee.
What makes these tremendous energy bargains possible? Competition, the Marcellus Shale, and booming national shale gas production are truly the golden goose for PECO’s consumers.