Peco gets competition for residential customers

With summer temperatures and electricity prices increasing, the competition for Peco Energy Co. residential customers is also heating up.

Five new suppliers have entered the residential market in the last month, bringing to more than 30 the number of suppliers targeting the 1.3 million Peco households since market rates went into effect on Jan. 1.

Two companies affiliated with out-of-state utilities are launching aggressive marketing campaigns this week.

Energetix Energy Services Co., a sibling to Rochester Gas & Electric Corp. in New York, is advertising its offers through direct mail, cable television, print media, and public transportation.

"We are somewhat late into the market, and wanted to come into it in a big way," said Sharon Burns, an Energetix spokeswoman.

Energetix is offering a 12-month fixed-rate deal at 8.95 cents per kilowatt hour, which represents a 14 percent discount from Peco's current price-to-compare of 10.42 cents per kilowatt hour.

The deal matches the better fixed-rate offers posted on the Pennsylvania Public Utility Commission's website, papowerswitch.com. The Pennsylvania Office of the Consumer Advocate also compares prices on its website.

Constellation Energy, a power retailer affiliated with Baltimore Gas & Electric Co., is also making a play this week for the residential market here.

Constellation is offering a 12-month fixed-rate price of 9.89 cents per kilowatt hour, a 5 percent discount over Peco's price-to-compare, the rate paid by the majority of customers who have not switched suppliers.

Constellation is no stranger to the area. It has supplied Peco's industrial and commercial customers for several years and says it has signed up 25,000 residential customers in New Jersey since entering retail markets in the Garden State last year.

It is owned by Constellation Energy Group Inc., which is merging with Peco's parent company, Exelon Corp. That means for some customers who switch, Exelon will remain both the supplier and distributor of their power.

Under the state's Electric Choice Act, which took effect Jan. 1, traditional utility companies such as Peco became solely distributors of power - "wire companies," as they are known.

Though the wire companies still handle billing and customer service, customers are free to choose a supplier that generates the power, which accounts for the biggest part of a residential bill. The distribution companies earn no profits from supplying power, so they are indifferent if customers switch.

Even though most suppliers offer discounts over Peco's default rate, most residential customers have declined to switch. About 20 percent of Peco's 1.6 million customers have switched.

Suppliers are using Peco's higher summer rates as an opportunity to increase their market share.

Peco charges 11.69 cents for summer usage above 500 kilowatt hours. But alternative suppliers do not charge the two-tiered rate, so customers who use a lot of power in the summer can multiply their savings by switching.

Constellation, in its marketing campaign, is selling its rate as a discount of "up to 12 percent" off Peco's rate. It has recast Peco's rate as 11.27 cents a kilowatt hour, a "weighted" price that it explains in a footnote is based upon a customer who uses 1,500 kilowatt hours a month during the summer.

The PUC has carefully crafted rules defining the "price to compare" so consumers can make an apples-to-apples evaluation of suppliers. PUC spokeswoman Denise McCracken said the commission's Office of Competitive Market Oversight was reviewing Constellation's campaign to make sure it complies with PUC rules.

"What we're selling is a fixed-price product for a period of time," said David I. Fein, Constellation Energy vice president of regulatory affairs. "That's what we're selling. We're not terming this a guaranteed-savings product."

For discount shoppers, the best current fixed-rate deal appears to be from an online group-buying operation, Alphabuyer.com. But that 8.79-cent fixed-rate offer expires Monday, and it is limited to the first 250 customers.