PPL Electric Utilities said Tuesday it will cut its residential rates by 10.7 percent, effective March 1.

It will be the fifth consecutive reduction for PPL since its rates jumped nearly 30 percent in January 2010.

The series of cuts will have nearly erased that record increase of two years ago.

PPL said it's been able to trim rates because it's paying less to obtain power on the wholesale market, a trend it foresees continuing.

Wholesale prices are down because natural gas — a main fuel for producing electricity — has dropped in price as it becomes more plentiful.

The new rate is the cheapest available in PPL territory, at least for now.

But it's likely that some rival suppliers will cut their rates in response.

That means consumers wanting the best deal will want to shop around.

PPL's new rate will be 6.935 cents per kilowatt hour, down from 7.769 cents per kwh currently.

A typical residential customer may use 1,000 kwh a month, according to PPL.

These rates are quoted in the "price to compare" format that's mandated by the state under its "Electric Choice" deregulation program.

The "price to compare" consists of the cost of power generation and transmission.

These elements make up 65 to 70 percent of the typical residential monthly bill and vary widely among power suppliers.

The "price to compare" does not include distribution charges, which are the same no matter which firm supplies your power.

PPL rates leaped 29.7 percent in January 2010, when state-approved rate caps expired.

That jump boosted its "price to compare" from 6.04 cents per kwh to 10.448 cents per kwh.

But with the new rate of 6.935 cents per kwh on March 1, the "price to compare" will have slid dramatically from that peak.

Since mid-2011, PPL has been adjusting its "price to compare" every three months.

The new rate is lower than the current rates offered by any of the 34 alternative suppliers competing in PPL's 29-county territory, which includes Lancaster County.

But many of those other suppliers regularly tweak their prices in response to PPL's quarterly adjustments.

So whether PPL still will be the lowest come March 1 remains to be seen.

Consumers can check supplier prices on websites run by the state Public Utility Commission and state Office of Consumer Advocate.

Those web addresses are papowerswitch.com and www.oca.state.pa.us, respectively.

PPL is known as a "default" supplier, meaning customers who do not pick an alternative supplier get PPL's power by default.

More than 586,000 PPL customers, or 41 percent, have switched to alternative suppliers.

PPL added that small business customers also will see a lower "price to compare" on March 1.

For them, the rate will drop to 6.387 cents per kwh, down 5.7 percent from the current 6.775 cents per kwh.

The utility does not receive any profit from serving as a "default" supplier.

It merely passes along the cost of that supply to customers without markup.

PPL makes its profit by delivering the electricity throughout its territory.

The utility is much like UPS and Federal Express, which make a profit by delivering merchandise, not by manufacturing the merchandise.

PPL has sister divisions that are in the power generating and marketing businesses.

tmekeel@lnpnews.com