In 1997, to lower the rates of electricity, Pennsylvania decided to pass the Electric Choice and Competition Act and in favour of energy deregulation. With customers both residential and commercial wanting to option to choose their electric supplier, it was a changing landscape across the nation.
Before electricity deregulation in Pennsylvania, consumers were paying up to $10 billion each year for electricity. This was up there with the highest across the nation, way above the national average.
Through competition on the market, the aim was to see a decrease in rates, reaching levels similar to the national average and saving customers $1.5 billion annually and if dropped to estimated levels, $2.5 billion could be saved each year.
For energy companies to begin to enter the market and develop, utilities had to unbundle their services, selling off their generation assets. This allowed new companies to purchase power on the wholesale market.
With price fluctuations expected in the first few years of energy deregulation, customers were protected as utility companies added rate caps, freezing energy prices for the transition period. However, this resulted in competition stalling to enter the market for numerous years.
All Pennsylvania electricity customers had access to available electricity suppliers in 2000. More than 507,000 customers had taken chosen to change energy suppliers and there were estimates by The Pennsylvania Department of Revenue that over 36,000 new jobs would be generated for the state through energy deregulation.
After the rate caps were lifted, there has been lots of good competition in Pennsylvania and energy deregulation has been a success. The first to lift their rate caps were PPL, later followed by PECO. By 2010, there were more opportunities than ever for customers to take advantage and lower their electric bills.
With more companies on the market, there was an initiative to increase renewable energy. The Pennsylvania Public Utility Commission created a concept that supports the rise of renewable energy generation within the state.
So, what are the current electricity rates in the state of Pennsylvania? Well, as of October 2021, statistics show that commercial electricity rates are 24% lower than the national average at 8.75 ¢/kWh. For residential electricity rates, it is a similar story as they are 1% lower than the national average at 13.73 ¢/kWh.
This shows that energy deregulation has been a success. From having some of the highest electricity rates in the country to being almost 25% lower than the national average.
However, there is still more work to be done on the renewable energy front, as roughly 50% of Pennsylvania households are using natural gas as their primary home heating source. Pennsylvania also has the most underground gas storage sites in the United States with 49 locations.
If we look at the years 2010 to 2018, Pennsylvania electricity generation from natural gas saw rates almost double to 36%. Some good news is that the coal share was slashed by more than half to 21%. So, we can say that prices have been lowered, competition has been a success, but the next step for the state is to work on more renewable energy sources. With only 4% of Pennsylvania’s electricity from renewable energy sources in 2019, there is some way to go.