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Default rates going down for PPL customers

Sam Kennedy | The Morning Call

The price of electricity for PPL Electric Utilities’ default customers will drop slightly next month, the Allentown company announced Thursday.

The new “price to compare” for residential customers will be 8.814 cents a kilowatt hour, down from the current 9.036 cents. This applies only to customers who have not chosen an alternative supplier and therefore receive “default” supply service from PPL Electric Utilities.

For the average residential customer who uses 1,000 kilowatts of electricity a month, that will translate into a monthly decrease of just over $2.

Commercial customers using the same amount of electricity, though, would save $8 because their new price will be 8.785 cents a kilowatt hour, down from 9.585 cents.

Generation and transmission charges together, which account for about two-thirds of the total electric bill, represent the “price to compare” for shopping purposes. (The state Office of Consumer Advocate posts shopping guidance on its website: http://www.oca.state.pa.us.)

The remaining charge on electricity bills is for distribution, or the delivery of electricity directly to homes over local wires.

Lower rates are partly the result of seasonal fluctuations, and partly the result of declining energy prices, according to PPL spokesman Bryan Hay.

Generally, energy prices have gone down as domestic supplies of natural gas and oil have gone up — a phenomenon tied to hydraulic fracturing. The technology, also called “fracking,” has led to a surge in the production of natural gas and oil, both of which are used to fuel power plants.

Related: PUC pushes on with investigation into natural gas retail market

Of particular importance is the abundance of natural gas, which for technical reasons plays a disproportionate role in determining the wholesale price of electricity in the mid-Atlantic region.

PPL Electric Utilities adjusts its generation rates and price to compare every three months, on March 1, June 1, Sept. 1 and Dec. 1, similar to other utilities in Pennsylvania. The generation rate for large industrial customers, however, is calculated separately, based on hourly market prices.

PPL Electric Utilities, a division of PPL Corp. of Allentown, does not own power plants or generate and sell electricity. Other PPL divisions handle those functions.

By law, PPL Electric Utilities must buy power on the wholesale electricity market on behalf of its default customers, providing it to them without markup. Such customers account for roughly half of PPL Electric Utilities’ 1.4 million customers across the state.

The other half have opted for contracts with alternative retail electricity suppliers who try to beat PPL’s default price or terms.