For most, Peco residential rates to drop 10.6 percent on Jan. 1

It's official: Peco Energy Co.'s residential supply charge will decrease 10.6 percent on Jan. 1.

The Philadelphia utility announced Tuesday that its price for most residential customers would decrease from 11.14 cents per kilowatt hour to 9.96 cents. For a customer using 500 kilowatt hours, the monthly savings would amount to $5.90.

Small commercial customers will see a 10.3 percent decrease.

Peco had signaled in October that its generation charge would decline Jan. 1. The charge is adjusted quarterly to reflect market conditions, and wholesale rates often soften during the winter.

But not all Peco customers will be smiling Jan. 1.

As it had previously warned, the utility will sharply reduce discounts for about 160,000 residential heating customers and 80,000 customers with electric water heaters Jan. 1.

For residential heating customers, the kilowatt-hour price for the first 600 kilowatt hours a month will be 10.05 cents, down 8.5 percent. But the discounted rate for amounts greater than 600 kilowatt hours will be 7.78 cents, about 30 percent more than the current price.

Rates for off-peak customers with electric water heaters will double from 3.22 cents per kilowatt hour to 6.54 cents, according to the filing with the Pennsylvania Public Utility Commission.

Peco was required to reduce the discounts under an agreement with state regulators to end subsidies for some rate classes. The discounts will disappear altogether at the end of 2012.

Customers are free to shop for alternative suppliers. Those who don't switch will receive Peco's price to compare, which is generally greater than the competition.

Although Peco is cutting discounts for heating customers, no alternative suppliers have made offers to those customers because the discounts are still below market.

But more than 30 suppliers are currently offering discounts to regular residential customers, though the suppliers will be under increasing pressure to keep their rates low in comparison with Peco's upcoming price of 9.96 cents. Recent surveys show that customers are reluctant to switch for small discounts.

About 381,500 of Peco's 1.6 million customers buy power from alternative suppliers.

A list of alternative suppliers is posted on the Pennsylvania Public Utility Commission's website: http://www.papowerswitch.com

A detailed breakout of Peco's residential rates: http://tiny.cc/f3qy6

A detailed breakout of Peco's commercial rates: http://tiny.cc/3by3w