Electric Choice in Pennsylvania

When we talk about Pennsylvania having a deregulated electricity market, what do we really mean? The term “deregulation” suggests that the concept of a regulated and streamlined system has been broken to provide for a market with the influence of other market forces. Literally, it means that the government rules have changed in a way that accommodates the entry of other players into a specific market. The state of Pennsylvania and other states in the US have been subjects of electricity deregulation recently.

Pennsylvania electricity rates and Pennsylvania electricity providers

For those people who are unaware of the recent changes, it is important to understand that Pennsylvania had a regulated electricity market till the year 1996, after which the government found it economical to deregulate the market and disrupt the monopoly that the investor-owned electricity suppliers were celebrating in different parts of the state. With the Electricity Generation Customer Choice and Competition Act, the government paved way for competitors to enter the electricity market with the hope that the cost of electricity can be reduced. Statistics say that Pennsylvania shelled out $10 billion on electricity in 1995; this impelled the state to look for alternative solutions. According to analysts, the state would have saved about $1.5 billion dollars if it had been paying the prices equivalent to the national average. With competitive prices, Pennsylvania could have saved even 25% of its costs.

In 1997, House Bill 1509 was passed which marked the beginning of the process of electricity deregulation. This was also known as the Electricity Generation Customer Choice and Competition Act of 1997. It focused on removing the benefits of the monopolies enjoyed by the incumbent providers, thereby serving as the first move into price reduction. By January 2000, almost all the pockets of the state have rolled out the red carpet for deregulation. Different parts of the state have understood that it is wise to have options for electricity generation so that the prices can be manipulated; customers consider deregulation to be an effective procedure which gives them the freedom to select the best and affordable Retail Electricity Provider (REP).

It is important to understand that with the deregulation in place, the role of the incumbent provider will be the same as far as power transmission is concerned. However, there will be a horde of REPs from which customers can choose their suppliers based on their requirement, affordability and mode of power generation.