PJM, which coordinates the flow of electricity from power generators to utility companies in 13 states and the District of Columbia, is facing complaints about how it ensures it will have enough capacity to keep the electricity flowing during a winter storm or summer heat wave. (Photo by fhm/Getty Images)
By Patrick M. Cicero and Terrance J. Fitzpatrick
Customers of electric and natural gas utilities are receiving higher bills this winter, pressuring family budgets that are already straining to cope with increased prices for food and other necessities. Let’s look at why utility bills have gone up and what customers can do about it.
Utility bills are higher because prices in wholesale electricity and natural gas markets tripled from early 2021 to the fall of 2022 due to a number of factors: the economic recovery following the pandemic, the war in Ukraine which strained energy supplies in Europe and elsewhere, and general inflationary pressures.
Pennsylvania’s electric and gas utilities are required by law to supply energy to customers who do not enter into contracts with competitive suppliers. Since utilities do not own power plants or gas wells, they buy supplies for these customers in wholesale energy markets under plans approved by the Public Utility Commission.
For electric companies, these plans seek to insulate customers from sudden swings in wholesale prices by using contracts of different durations, and utilities adjust their supply prices (either up or down) quarterly or semi-annually to reflect these wholesale purchases.
For gas utilities, these plans include purchases at different times to make sure that not all the supply is bought at any one time. Utilities do not earn a profit on the charges to customers for energy supplies and are required to do what they can to ensure that the wholesale costs paid are least cost over time.
Customers have several options to cope with these higher bills.
First, they can contact their utility and sign up for budget billing, which smooths out month-to-month variations in their bills by averaging their bill over the year. Customers can also control costs by conserving energy.
This includes adjusting thermostats, using more efficient lighting and appliances, servicing heating and cooling systems, and weatherizing their homes.
In many cases, utilities provide incentives for conservation improvements to customers’ homes. All gas and electric utilities have programs to assist low income customers with energy efficiency and weatherization as well as assistance programs that provide reduced bills and payment assistance.
Customers who are struggling to keep up with payments should contact their utility to discuss payment arrangements for past due amounts, and also to get information on government and utility-administered assistance programs.
Customers can also consider purchasing energy supplies in Pennsylvania’s competitive retail market. A good way to start comparing prices is to visit the “Power Switch” (www.papowerswitch.com) and “Gas Switch” (www.pagasswitch.com) websites the PUC administers for the retail electric and natural gas markets.
But a word to the wise on “shopping” for energy supplies—be careful and thoughtful in evaluating offers. While it may be possible for some customers to save money by switching, data shows that overall, a utility’s customers who purchase from competitive suppliers end up paying more over time than if they had bought supplies from their utility.
Customers should look at the length of the contract, whether it is for renewable energy, and whether early termination fees apply. Customers should also remain diligent to consider their options when their supply contract expires.
Once a customer chooses an alternative supplier, they remain with that supplier until they choose to return to utility provided service or switch to another supplier.
At the end of the contract, many suppliers increase the prices charged. Consumers need to make sure that they know what they are paying to ensure they are not placed on a volatile variable rate that can change dramatically from month-to-month.
If consumers have questions about what their costs are, they should carefully review their bill and/or contact their utility. Consumers with questions about their utility bills can also contact the Office of Consumer Advocate at 1-800-684-6560 or by email at [email protected].
While there are no “silver bullets” to solve all the problems arising from higher utility bills, customers do have options to lower costs and obtain assistance.
Patrick M. Cicero is the Consumer Advocate of Pennsylvania and is responsible for representing the interests of consumers before the Pennsylvania Public Utility Commission Terrance J. Fitzpatrick is president & CEO of the Energy Association of Pennsylvania, a trade group comprised of electric and natural gas utilities in the Commonwealth
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