Rate Cap FAQs
There's been a lot of talk about changes in electricity in Pennsylvania. What's it all about? And how does it affect you?
We agree it can be awfully confusing. It's time someone made it simple. Take a look some of the common questions being asked. Hopefully, we can help shed some light on the situation.
WHAT IS A RATE CAP?
In 1997, Pennsylvania passed the Electricity Generation Customer Choice and Competition Act. This act "capped" the cost of electricity, essentially freezing the rate you paid for the cost of the electricity itself.
WHAT DOES IT MEAN THAT THE RATE CAP IS BEING LIFTED?
Since 1997, when the rate cap was enacted, the actual market costs of generating and transporting energy have increased. When the rate cap is lifted in January 2010, your price will no longer be frozen and will reflect current market conditions.
WILL MY RATES GO UP ONCE PPL LIFTS THEIR RATE CAPS?
In short, it's quite likely. PPL and the Pennsylvania Public Utility Commission have estimated that the average residential customer could see an increase of approximately 30%, and small commercial customers may see an increase of approximately 18% starting on January 1, 2010. Although we do feel that competition among Direct Energy and other electricity-generation suppliers might soften the impact.
HOW ARE RATES DETERMINED?
Generation rates charged by PPL are based on the price of electricity on the wholesale market, which changes daily. These rates change on a frequent basis, and if you stay with PPL, will vary on a quarterly basis. If you sign up for a fixed-price plan with Direct Energy, your rates will stay fixed for the length of your contract.
WHAT DOES IT MEAN THAT I HAVE A CHOICE IN ENERGY PROVIDERS?
PPL has been sole energy provider - they have sourced the generation of your electricity and have been responsible for delivering it to your home or business. With the introduction of competition, you have the ability to choose your electricity-generation supplier. This means there will be many plans and rates to choose from.
WHAT HAPPENS IF I CHOOSE AN ELECTRICITY-GENERATION SUPPLIER OTHER THAN PPL?
Basically, the only major change you'll see is the rate you pay. PPL still sends you your bill and provides service if there is an outage.
IS CHOOSING A NEW ENERGY SUPPLIER SAFE?
PPL will still deliver your electricity and provide emergency service if there is an outage. The Pennsylvania Public Utility Commission will still enforce consumer protections and regulate energy delivery. When deciding on a new electric-generation supplier, consider these items:
- Understand the 3 P's - product, plan and price
- Look for a supplier that is financially stable and can continually meet your energy needs
DOES DIRECT ENERGY PROVIDE ELECTRICITY PLANS?
We have a number of plans to fit your specific needs. For example, our fixed-rate plans will help keep your electricity-generation rate predictable; our green plans will help you support renewable energy in your area.
