NORTHEAST PENNSYLVANIA — Paying for electricity in Pennsylvania can be frustrating enough for anybody. For residents new to the commonwealth, it can be a nightmare.

Between November 2021 and now, the default electric rate from PPL Electric Utilities, the electric distributor for much of Northeast PA, has practically doubled from 7.6 cents to 14.6 cents per kilowatt hour.

Residents in PA are free to look for a better rate on their own. But shopping for electricity presents risks of its own. 

The state’s Public Utility Commission (PUC)—tasked with regulating more than 7,000 utilities throughout PA—warns residents to be wary when shopping for a new electric provider, or they might end up with even higher bills than before they switched.

That’s what happened to Joe Redondo, originally from Arizona, who’s been living in Greentown, PA for the past several months. 

Until last February, Redondo got his electricity from a company called Green Mountain. For all the months he was with them, he said there were “no surprises” on his monthly bill.

“The bills came, they were all in the same ballpark for the whole time we had them… it was high, higher than we’re used to [in Arizona],” Redondo said. Pennsylvania had the 12th highest electric rates in the country as of September 2022. 

Then he got a call from another supplier, Smart Energy Holdings, with the promise of a lower rate.

“They said all the right key words… ‘We can save you money,’ and that’s what they want you to hear,” Redondo said. “Me being new to the area and not knowing what anybody charges anywhere around here, I don’t even know what a kilowatt hour is… I’m kind of mad at myself for falling for it, but at the same time I didn’t know.”

With the understanding that he’d have a lower bill with the new company, he switched and received his first bill for February. It was double what he’d been paying with Green Mountain.

When he called Smart Energy and complained, they told him that’s the rate he agreed to. When he called PPL, the electrical distributor in the area, and told them that he was going to fight this bill, he found out it was too late.

“I said I’m going to try and negotiate with [Smart Energy], and the PPL guy said, ‘Well you can’t, we’ve already paid them for your bill,’” Redondo said. “Basically what they did is they took any negotiating power away from me.”

When Redondo spoke with the River Reporter, he was in the process of filing a complaint with the PUC over the bill. However, in the meantime, he said he’s had no choice but to pay the twice-as-high electric bill for February. He’s switching back to his original supplier, he said.

To shop or not to shop

In Pennsylvania, your electric supplier is not the same thing as your electric distributor/utility. Distributors—like PPL—are those that deliver your actual energy, like a FedEx for electricity. Meanwhile suppliers—like Green Mountain or Smart Energy Holdings in Redondo’s case—are those that sell you your electricity.

Pennsylvania is one of the few states in the country with a deregulated electric marketplace—a result of legislation passed in Harrisburg during the 1990s. Because of this, PA residents can choose any supplier they want. Others may prefer not to “shop,” and simply go with the default rate determined by their distributor, also known as the “price to compare,” which is adjusted two to four times per year.

“The choice to shop, or not to shop, is a very personal one, and the decision rests with each individual resident, business or industry,” said Nils Hagen-Frederiksen, the PUC’s press secretary. “Customers who use more energy each month are generally the ones who are most likely to shop, because even a very small difference in price between a supplier’s price and the utility price to compare can add up to a noticeable dollar amount at the end of each month or at the end of the year.”

Right now, PPL’s price to compare is a little more than 14 cents per kilowatt hour. So a house using 886 kilowatt hours per month (the nationwide average in 2021), would pay about $130 per month. Of course, the bill will fluctuate throughout the year as heating and cooling needs change.

Many residents choose to shop for electricity because they want to find a better deal than the price to compare. However, not all shoppers end up paying less, according to PPL.

“Our most recent review of shopping results found that over 40 percent of our residential shopping customers paid more than the price to compare in November. Over 100,000 paid 25 percent to 100 percent more than the default rate. And nearly 20,000 customers paid over twice our price to compare,” said Alana Roberts, PPL’s manager of community relations. “Make no mistake, customers who shop wisely can find better deals for electricity supply, and PPL has consistently encouraged customers to consider all of their options by visiting www.PAPowerSwitch.com.”

That being said, Roberts added, “it’s absolutely essential that customers carefully review the terms and conditions of a supply contract before moving forward with a supplier. This includes understanding the contract term, any associated cancellation fees and other conditions that may apply.”

How to read the bill

Hagen-Frederiksen said the PUC advises consumers to understand the two major components of their monthly energy bills:

• Delivery/distribution rate- This charge includes the cost for the operation and maintenance of the poles, wires, pipelines, and other infrastructure that delivers energy to your home or business. This portion of your monthly bill supports your utility.
• Generation/supply charge- This charge covers the cost of the energy (electricity or natural gas) used during the month. The energy cost for this portion of the bill is determined through one of two ways. For a consumer who shops, the charge is based on their contract with a competitive supplier. For consumers who do not shop, the utility provides energy supply at the price to compare.

“PPL Electric Utilities doesn’t own power plants, generate electricity, or control the cost of electricity supply,” Roberts said. “If you don’t shop, we’re required to shop for power on your behalf. We pass along the cost—without markup or profit for PPL.”

Per state law, utilities like PPL are not allowed to make a profit off of their price to compare.

Spotting scams and bad contracts

“When it comes to consumers safeguarding themselves against potential problems, the best defense is a good offense,”  Hagen-Frederiksen said. “The more consumers understand about how energy shopping works, the better equipped they are to spot suspicious offers or possible scams.”

Salespeople from legitimate energy companies are required to follow strict guidelines for telemarketing.

1. Callers must identify who they are and who they represent at the start of the call,
2. Callers must clearly explain why they are calling,
3. Callers may not claim to represent the PUC or a utility, like PPL.

Door-to-door sales agents must follow similar guidelines in which they clearly identify themselves and the name of their energy supplier.

“So, if you get a call or an in-person encounter about energy sales, but they do not immediately tell you who they are representing, or they claim to be operating on behalf of your utility, you will know it’s a questionable situation,” Hagen-Frederiksen said.

When considering an offer with a legitimate supplier, PA tells residents not to sign up for anything without fully understanding the terms of the contract they’re signing.

The PUC recommends asking questions like: How does the supplier’s rate compare with the distributor’s default rate? Is the supplier contract for a fixed or variable rate; if the rate is variable, how or when will it change? Does the contract mention additional fees, such as membership or early contract termination fees? When will the contract expire, and what are the options for consumers when it does expire?

To view all of the available offers in your area and more information on how to shop warily, residents can visit www.PAPowerSwitch.com.

If you have complaints about your energy bill, the PUC directs residents to first contact their utility; PPL’s phone number is 1-800-DIAL-PPL.

If you’ve already contacted PPL, residents can file complaints with the PUC at www.puc.gov/complaints or by calling 1-800/692-7380.

If you want to share your story about struggling with high energy costs, or about being targeted by scammers, please send an email to owen@riverreporter.com.