September 27, 2010
Editor’s Note: This is the second post in the Sweet Solar Home’s blog series on Pennsylvania energy. Be sure to check out the first post on natural gas fracking.
Come January 1st, 2011, electricity rates in Pennsylvania will rise.
The rise in rates will be driven by expiring electricity rate caps for Metropolitan Edison Company, Pennsylvania Electric Company, PECO Energy Company, and West Penn Power Company, which provide electricity for over 60% of Pennsylvania ratepayers.
How do Pennsylvania Rate Caps Work?
Pennsylvania’s electric rates were capped under the 1997 Electricity Generation Choice and Competition Act. This law allowed the state’s residential customers to purchase power from independent electric generation suppliers (EGS) while still having their power physically delivered by electric distribution companies (EDCs), which are regulated by the Pennsylvania Public Utility Commission (PUC).
The law also capped generation, transmission, and distribution rates at 1996 levels. Transmission and distribution rate caps have since expired, but the generation rate caps were extended for many of the electric companies until January 1st, 2011. This is why come New Year’s Day, PA’s electric rates will become uncapped.
What Does the Expiration of Rate Caps Mean for Homeowners?
Once these generation rate caps expire, your electric bill will most likely increase. The state’s PUC expects that customers’ electric bills will increase because the market prices for electricity have risen significantly since 1996. The magnitude of these increases, the PUC explains, will depend on the market prices for electricity when the EDCs acquire their power.
PennFuture (Citizens for Pennsylvania’s Future), a Pennsylvania environmental advocacy organization, predicts that residential customers may see an increase in electric rates from 20 to 50% when rate caps expire. According to PennFuture, “this is because prices have skyrocketed for natural gas and other fossil fuels used to make electricity, leading to substantial increases in the cost of electricity.” While rate caps had protected customers from these increased costs, once the rate caps expire, these costs will be passed to the customer.
Customers have already seen an increase in electricity costs in areas where rate caps have already expired. In Pike Country, residential customers saw an increase in 70% in total electric bills in 2006. Residential customers of Baltimore Gas & Electric saw their bills increase 72% on July 1, 2006 and those of Delmarva Power Co. in Delaware by 59% on May 1, 2006.
How Can Homeowners Prepare For the Rate Hikes?
One way that homeowners can mitigate the utility rate hikes is by switching to clean, affordable solar power from SunRun. Available in Pennsylvania since August 2010, SunRun allows homeowners to lock in today’s electricity rates for the next 20 years with its solar power service offering. This is because with SunRun, homeowners pay for the solar electricity produced by their home solar system, rather than purchasing the solar system themselves. And because SunRun owns your system, we take complete care of it as well – everything from monitoring to repairs, including a money-back performance guarantee for the lifetime of the service agreement (20 years).
Best of all, while your utility can raise its rates at any time, your solar electricity rates will remain low and fixed. By offering clean and affordable solar power service to Pennsylvania homeowners, SunRun is the best alternative to your utility.
Don’t be caught off guard this New Years Day. Switch to solar power today and make a difference for the environment and your electric bills.
