Dropping utility company rates bode well for competition in Pennsylvania

Electricity prices in Pennsylvania surged last year with the end of rate caps for the state's utility companies, but that trend is reversing now.

The Scranton Times-Tribune reports that utility company PPL Electric Utilities announced plans to reduce its rates 10.7 percent for its residential customers, largely because of plummeting natural gas prices in the state.

The massive growth in natural gas production spurred by hyrdaulic fracturing, or fracking, is helping to lower electricity rates in the state, but the benefits are not limited to people who receive their power from the utilities.

PAPowerSwitch.com reports that nearly 1.6 million Pennsylvanian customers switched electricity providers because these companies were able to take advantage of the low natural gas prices much more quickly than utilities.

Some of these customers have prices tied directly to the price-to-compare set by their utility company, but everyone else can benefit in other ways. Because retail electricity providers can offer different rates whenever they like, they tend to try to match or beat the price-to-compare, making it easier for people to shop around for a new deal if their contract allows them to change providers.