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| CHOOSING AN ELECTRICITY GENERATION SUPPLIER |
Now that Pennsylvania has implemented the deregulation of electricity generation, you have the opportunity to select your electricity generation supplier.
Before selecting an electricity generation supplier, there are many questions that you need to ask and then you need to evaluate the assurances that you receive from the various suppliers that you are considering. The top ten groups of questions that you need to ask are:
1. How much will I pay?
What is the overall cost per kilowatt hour of generated electricity that is being negotiated? (Be sure to exclude charges from your local utility for transmission, distribution, and local service since these prices are controlled by regulation and are not negotiable.) If all kilowatt hours are not charged at the same rate, what incentives are provided for a lower price of electricity. For example, what are the on-peak and off-peak rates for electricity? When is the off-peak period for each month of the contract period? Are there fixed and variable rate contracts? Are there any demand charges? Are there any volume discounts?
2. What are the signing bonuses?
What is the value of extra services and gifts that are being offered as incentives to sign contracts? Are these extra services and gifts valuable to you? Just how badly do you need another toaster or bird feeder? Or what is the true value of a free month of electricity or a frequent-flyer mile for each 100 kwh?
3. What will be included on my utility bill?
Will there be separate bills for generation and all the other charges or can you get just one combined bill? To what extent will individual expenses be itemized on your bill? Will there be any fees (exit charges, termination fees, transition fees, etc.) if you terminate service with your current supplier of generated electricity? Are there any fees that the new electricity generation supplier will be charging such as origination fees, demand charges, service charges, minimum charges, and termination fees?
4. Can I buy "renewable" electricity?
Will your supplier provide "renewable" electricity, i.e., electricity generated from replenishable energy sources, such as hydropower, wind, solar, geothermal, or biomass? How much extra will you pay for renewable electricity? How can you be sure you are getting renewable electricity?
5. What is the length of contract?
What is the minimum length of contract period that each electricity generation supplier is requiring? Under what circumstances can you terminate the agreement before the end of contract period? Under what circumstances can the electricity generation supplier terminate the contract? What are the penalties to the supplier and/or customer for contract termination? Can the contract be renewed automatically or is it subject to negotiation at that time again?
6. What happens if my electricity generation supplier does not meet my electricity needs?
What recourse do you have if your electricity generation supplier is unable to provide you with all the electricity you need? How much will you pay to get electricity if your designated supplier cannot provide?
7. Am I negotiating with a reliable electricity generation supplier?
Is your electricity generation supplier licensed by the Pennsylvania Public Utilities Commission to sell electricity? How will you be able to contact your supplier after the contract is signed? Can you contact your supplier 24 hours a day, seven days a week? Is your supplier likely to be available in the future to meet your needs? Is your supplier investing in your community or region as a "good citizen" to improve the quality of life for everyone?
8. Will I be getting interruptible or non-interruptible service?
Do the advertised rates for electricity apply to interruptible or non-interruptible service of electricity? If the rates are for interruptible service, what provisions exist for obtaining electricity--or other forms of energy--during the interruption? What is the cost of an alternate supply of electricity or other energy during the interruption? Under what circumstances and how often will your electricity supply be subject to interruption?
9. How can I lower my utility bill?
How can you reduce your expenses for electricity and other forms of energy through an energy management program? To what extent will your electricity generation supplier assist you in optimizing your use of energy to maximize the profitability of your business, company, or farm? Can the supplier assist you to reduce expenditures for energy in your home?
10. What are the benefits of aggregation?
How much can you save if you aggregate with other customers? What types of customers should combine into the aggregated group of electricity customers? When joining an aggregated group, what happens if X% of the members of the aggregated group forfeit the contract? What is the maximum percentage of members forfeiting their contracts that will result in the entire aggregated contract being canceled ?
You need to educate yourself now so that you can be an informed shopper when selecting an electricity generation supplier. Additional information is available from your local utility company, Penn State's Agricultural & Biological Engineering Extension, trade journals, popular press, and PA Public Utility Commission.
Home Deregulation Definitions Deregulation-
The FactsPreparing for Deregulation Do's and Don'ts
Dennis Buffington
Professor of Agricultural and Biological Engineering
Penn State University
Email: dbuffington@psu.edu
814-865-2971 (Voice)
814-863-1031 (FAX)
