Pennsylvania deregulation opens opportunities for businesses

Though Pennsylvania implemented electricity deregulation a full decade and a half ago, the process has proven long and difficult as certain limitations were only ended at the start of 2011. With the more completely deregulated electricity prices, PPL EnergyPlus president Robert Gabbard explained to Smart Business how companies could effectively take advantage of the increasingly competitive market.

Gabbard notes that even 15 years after the initial passage of the electricity deregulation policy and 10 months after the end of the artificial price supports that warped the market, many Pennsylvania businesses still have yet to take advantage of alternative electricity providers.

The Pennsylvania Public Utility Commission reports that only 32.6 percent of commercial customers and 61.9 percent of industrial customers have chosen to switch electricity suppliers, though these businesses account for 56 percent and 84.8 percent of usage in those respective sectors. Residential customers have been even more reticent, with only 23 percent choosing to switch.

Gabbard notes that the potential for businesses to change electricity providers is particularly strong, however, because many companies can receive even better rates based on their higher usage.

In part, the best way to approach electricity providers is for companies to understand the nature of their business and the likely trends in their energy demand. If they rely on long-term contracts with customers, stability in electricity rates from multi-year power contracts can prove helpful. Companies with a shorter scope can instead stick to monthly contracts that can help take advantage of fluctuations in fuel prices as well as build a rapport with different electricity providers.

Signing long-term with a provider does not preclude benefiting from dropping prices either, since companies can sometimes either back out of or renegotiate contracts. As electricity companies increasingly begin to compete for more business, the terms of electricity contracts and the services provided along with them should steadily improve.

"Energy companies competing for business in a competitive, open marketplace foster innovation and technology developments, so be on the lookout for products and services that will help you monitor and control your daily usage and forecast your future needs," Gabbard told Smart Business. "Don’t hesitate to suggest a new product from your supplier."

The U.S. Energy Information Administration reports that electricity rates spiked for residential consumers through July, as prices adjusted for rising fuel prices, but business electricity prices have actually remained relatively steady, likely on the back of increased competition.