New Castle News

Closer Look

March 5, 2014

Our Opinion: Some consumers pay price of changing power suppliers

NEW CASTLE — Choice may be good, but an informed choice is even better.

That’s the conclusion we draw from reports here in Lawrence County and elsewhere around Pennsylvania about some residents and businesses receiving electric bills that are substantially higher than normal.

At issue is the cold weather that has hit the northeastern United States this winter and the demand this has placed on electricity consumption. Also factored into the mix is the electric choice program Pennsylvanians enjoy.

But for some, “enjoy” probably isn’t the word that comes to mind at the moment.

Traditionally, the supplying of electrical power in Pennsylvania has been via a monopoly. Here in Lawrence County, Penn Power is the main utility. Because it is a monopoly, Penn Power and its rates are heavily regulated by the Pennsylvania Public Utility Commission.

However, changes to laws and regulations in recent years have created a program that allows individual customers to select their own power companies. While Penn Power continues to deliver electricity (it owns the local lines), consumers can contract with other companies that technically provide the power.

Yet not all of these companies have generating plants that put electricity into the grid. Some of them are basically commodities traders, buying power in the marketplace, then selling it to customers.

And that’s the problem. When demand shoots up for power in cold weather, the price of that power on the open markets climbs. In some instances, that has resulted in big cost increases being passed on to consumers.

We’re sure that’s not the outcome individuals expected when they chose to change electric suppliers. Typically, the sales pitches offered by these companies imply lower rates than what’s available from Penn Power.

Undoubtedly, every homeowner and business owner has seen offers from these companies. They come in the mail and even in door-to-door solicitations. Like any pitch, they seek to put their offers in the best possible light.

So consumers have a choice to accept these offers or to pass. What’s obviously crucial in this process is that consumers need to know what they are getting into if the market for electricity jumps.

Right now, the PUC and the Pennsylvania attorney general’s office are looking into complaints about these big power bills. Perhaps state officials will find examples of inappropriate billing by these companies. Or maybe they will confirm the laws of supply and demand.

Regardless, this episode is a reminder that when it comes to matters of choice, consumers have an obligation to look out for their interests and read the fine print. They are their own last line of protection.

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