PPL Electric Utilities has tried for years to encourage more of its customers to shop for cheaper sources of electricity, which the state has allowed customers to do since 2010.
Maybe more will be motivated to look around now.
PPL is raising its residential rate by 26.0% effective Dec. 1, the company has quietly disclosed. The new price of 9.502 cents per kilowatt hour, up from 7.544 cents per kWh, nearly ties its high point over the past 10 years, according to LNP | LancasterOnline files.
Its commercial rate for businesses will leap much more – by 36.4% -- to 10.285 cents per kWh from 7.541 cents per kWh.
Electricity rates are soaring largely because of higher prices for natural gas, the fuel that powers many electricity-generating stations, due to demand rising as the economy gradually continues to recover from the pandemic-induced recession. Overall inflation is a factor too, according to PPL.
Higher electricity rates could be especially painful for the 71,000 households in Lancaster County who are heavy users of the energy source because they use it to heat their homes.
That translates as 34.5% of all housing units in the county, making electricity the most common source of home heating fuel. It’s a bit more popular than natural gas, the runner-up at 33.7%, according to the U.S. Census Bureau.
But as always, residential customers have an abundance of cheaper choices than PPL, per the state Public Utility Commission’s rate-tracking website, papowerswitch.com. The website shows 20 lower fixed-rate offers than PPL’s upcoming rate of 9.502 cents per kWh.
The lowest as of Wednesday afternoon was Star Energy Partners at 7.490 cents per kWh.
Since the state deregulated the electricity market in 2010, utilities have urged their customers to take advantage of their newfound freedom to save money.
Some customers have stayed with their utility out of loyalty. But whether a customer finds an alternative source for electricity or continues to use the utility as his or her supplier has no impact on a utility’s business, since utilities must re-sell the power to customers at the same price the utilities paid to obtain it.
(Utilities make their profit on the price they charge to deliver that power over its system of wires, transformers and substations to customers, much like UPS or FedEx makes its profit on delivering packages.)
Consumers have been tough to persuade to shop, though. A mere 34.7% of residential PPL customers buy their supply from an alternative source, according to the PUC.
And, believe it or not, that’s a strong level of participation in what used to be promoted as the state’s “Electric Choice” program, comparatively speaking. Of 11 electric utilities in the state, only Pike County Light & Power has more residential customers who shop. It has 44.0%, per the state.
But if that one-third participation by PPL customers is ever going to rise, the upcoming PPL rate -- which will be at that level for at least six months – might do the trick. The new rate has been seldom seen by the Allentown-based company’s more than 1 million residential customers across Lancaster County and 28 other counties.
Over the past decade, the upcoming rate was topped just once, at 9.559 cents per kWh in spring 2015, according to LNP | LancasterOnline files.
These rates are quoted in the so-called “price to compare” format, as required by the PUC. It includes the cost to procure the power and move it over high-voltage transmission lines, but not the cost to deliver that power the final distance from a substation to a home or business.
While the imminent rate is rare, the way that PPL disseminated news of its pending arrival is different. PPL used to announce its latest price-to-compare rates via press releases to the media as well as direct communications with customers. PPL stopped alerting the media of them this year without notice.
A company spokesman did not immediately respond to a request from LNP | LancasterOnline for an explanation of the change in procedure. A PUC spokesman said a utility must notify customers of its new rates by putting the information on bills and must post the information on the utility’s website but does not have to inform the media.