PECO Energy Company, a subsidiary of Exelon Corporation (EXC), announced completing the third out of four planned electricity purchases to serve customers who have not chosen any other electric generation supplier beginning Jan 1, 2011. This marks PECO’s preparation for its final transition to a competitive electricity market in Pennsylvania.
 
The May 2010 purchases resulted in an energy price of 7.95 cents per kilowatt hour (kWh) for PECO’s residential customers. Combined with 2009 purchases, the May purchases result in a price of 8.91 cents per kWh for PECO’s residential customers, 8.66 cents per kWh for small commercial customers, and 8.63 cents per kWh for medium sized commercial customers.
 
The electric utility restructuring legislation adopted in Pennsylvania in December 1996 allows customers to choose a competitive electric generation supplier. The order required rate reductions and imposed freezes or caps on rates during a transition period following the adoption of the legislation. PECO’s transition period under the order ends on December 31, 2010.
 
Beginning Jan 1, 2011, which marks the end of rate caps for PECO, the prices PECO and its customers pay for electricity will be based on electricity market pricing. Also, PECO’s power purchase agreement (PPA) with Exelon Generation expires on December 31, 2010, after which PECO will procure its energy through alternative means.
 
In order to keep prices low for its customers, PECO continues to purchase electricity at lower wholesale market prices. As energy prices fluctuate, PECO is buying the electricity needed to serve customers in 2011 at four different times. Thus, reducing risk to customers of purchasing electricity all at one time when market prices could be high.
 
PECO will complete the remaining purchases in September 2010. The results of all four purchases will determine the exact price PECO’s customers will pay for electricity beginning Jan 1, 2011.
 
PECO Energy states that the costs to operate the electric systems have been increasing over the transition period. The company estimates price increases of about 10% following the effect of all of these changes on its electricity customers. Going forward, a typical residential electricity customer is expected to experience a price increase of about $8 per month.
 
The company also has various programs in its PECO Smart Ideas to help customers use less energy and save money, including use of energy-saving compact fluorescent light (CFL) bulbs and rebates to customers purchasing qualified energy-efficient appliances, etc.
 
PECO is an electric and natural gas utility subsidiary of Exelon Corporation. PECO distributes electricity to 1.6 million customers and natural gas to 485,000 customers in southeastern Pennsylvania.
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