Rising energy costs are about to hit home for most Pennsylvania electric customers.
The state's largest electric utilities are poised to pass along significant price increases from power generators on June 1. Energy charges, which make up about half of a typical residential electric bill, are set to climb as much as 46% in some parts of the state, according to the Pennsylvania Public Utility Commission.
PPL Electric, whose territory stretches from the New York border to Maryland and includes parts of Chester, Montgomery, and Bucks Counties, is set to boost electric charges 38%, from 8.94 cents per kilowatt hour to 12.37 cents. For a customer using 1,000 kilowatt hours a month, that's an increase of $34.30 to their bill.
Energy charges for customers of UGI Electric, which serves customers near Wilkes-Barre, are set to go up 46% from 8.55 cents per kWh to 12.9 cents. Just six months ago, UGI's price was 6.2 cents per kWh, or less than half the price that will go into effect on June 1.
Electric charges for residential customers of Peco Energy, which serves 1.6 million accounts in Philadelphia and five other counties, are set to increase 8.1% on June 1, from 7.07 cents per kWh to 7.64 cents. That's the smallest increase in the state, and Peco's 7.64-cent residential energy charges will actually be the lowest among Pennsylvania utilities, at least until the next quarterly price adjustment, on Sept. 1.
Utility bills are soaring in the Philly region and so is customer outrage
The quarterly price changes go into effect on June 1, which means customers will face bigger bills during the summer cooling season when annual electricity consumption peaks. The energy charges, which pay for actual electricity consumed, are separate from a utility's distribution charges, which are rates set by the PUC to cover a utility's cost for maintaining the network of wires to deliver the energy to customers.
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Why prices are rising
There are ways to soften the impact of higher energy charges, but the window of opportunity appears to be shrinking for one of them: A discounted deal from competitive suppliers that Pennsylvania calls its "standard offer" program.
Electricity charges are increasing now largely because higher energy costs are driving up the cost of generating power. The same economic forces that have boosted gasoline and diesel prices in the last year, and home heating costs last winter, have also driven up the costs of natural gas, the fuel used to produce much of the region's power.
Energy charges vary among Pennsylvania utilities due to the different PUC-approved formulas that each company uses to buy power from electricity generators. Some companies buy most or all their power at spot market prices, so their rates tend to be more volatile, and reflect current market conditions.
Peco conducts electricity auctions semi-annually and buys about 40% of its power in one-year contracts, and 60% in two-year contracts. Much of its power was procured last year when prices were lower — hence, its energy prices are not moving up as fast as other utilities.
The quarterly price changes impact about 75% of Pennsylvania customers who receive their electricity from their utility. Customers who have chosen a third-party competitive power supplier are not affected, though many are already paying higher prices because competitive suppliers have also experienced the same market conditions that have driven up wholesale costs.
In New Jersey, it's a different story.
Most residential customers in the Garden State will experience reductions ranging from 1.1% to 2.8% when annual price changes go into effect on June 1. The New Jersey Board of Public Utilities conducts energy auctions annually in February for the state's four electric utilities. A large amount of New Jersey utilities' purchases were locked in under three-year contracts signed in 2020 and 2021, when prices were lower, cushioning customers from current soaring costs.
Tips on saving money
For customers facing higher bills this summer, there are ways to reduce the impact.
Utilities offer a host of programs and grants to support low-income customers, and they encourage anyone struggling to pay their bills to call for help.
Customers can also control their costs by conserving energy — adjusting the thermostat, using more efficient lighting, and shutting off unnecessary appliances. In a climate of rising energy prices, investments in weatherization improvements will return dividends and pay themselves off more quickly. Peco and other utilities offer free in-home energy audits to suggest ways to reduce consumption.
Peco last year introduced time-of-use rates that include steep discounts for customers who can shift electric usage to late night hours, such as an electric vehicle charger. But customers who choose hourly rates must be mindful about managing usage because prices during peak hours of 2 p.m. to 6 p.m. on weekdays are nearly 24 cents per kWh, or triple Peco's flat-rate price.
Opportunities to cut costs by signing up with a competitive energy supplier appear to be increasingly scarce.
Only one of 103 offers posted for Peco customers on the PUC's website, papowerswitch.com, is below the utility's current default rate. And that offer is a variable rate that is guaranteed only for one month, after which it may increase above Peco's price. The PUC does not regulate prices from third-party suppliers.
About 24% of Pennsylvania residential customers buy from competitive suppliers, down from 27% a year ago.
The 'standard offer'
The window also appears to be shrinking on another path for Pennsylvania residential customers to buy power at a discount from competitive suppliers, called the "standard offer." The standard offer was created by the state as a marketing tool to introduce customers to competitive suppliers.
Here's how it works: Customers who call their utility will get randomly assigned to a competitive supplier that has agreed to offer a 12-month fixed-rate plan at 7% below the utility's current price. Under the PUC's rules, customers can cancel a standard offer any time over the year with no early cancellation or termination fees.
Customers who sign up with Peco's standard offer this week will get 7% off the current default rate of 7.07 cents, or 6.57 cents. That will be 14% below the higher 7.64-cent rate set to go into effect next week, on June 1.
But only one supplier currently is available to accept new Peco standard offer customers, said Peco spokesman Greg Smore. That's down from four in December and seven in November.
There is only one standard offer supplier available now in Met-Ed territory, which includes parts of Bucks, Montgomery and Chester Counties, where energy prices will go up 16% on June 1. Penelec, Penn Power, and West Penn Power territories also have one supplier, said Nils Hagen-Frederiksen, the PUC spokesman. There are no suppliers participating in the standard offer program in Duquesne Light.
It is unclear if there are any standard offer suppliers available in PPL territory, where customers in November inundated the company's switchboard after the media reported the standard offer program was a mechanism to avoid an impending 26% increase in PPL's energy charges, from 7.5 cents to 9.5 cents per kWh. Many customers who attempted to call the day before the price shift said they were unable to reach a PPL agent.
