Pennsylvania Electric Deregulation May Be Headed For Failure, According to Energy Info Source, Inc. : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

June 7, 2001

LAKEWOOD, Colo.--(BUSINESS WIRE)--June 6, 2001 via NewsEdge Corporation -

Pennsylvania has generally been recognized as the one state where electricity deregulation has worked.

However, cracks in the foundation have begun to appear. Alternative suppliers are leaving the State in droves, wholesale prices are increasing, and the rate freeze, which has been cited as the major source for customer savings, seems to be on its way out. These and other recent trends seem to point to upcoming failure for Pennsylvania, according to Phillip Bryant in the latest edition of the Power Observer newsletter.

The key reason for potential failure, Bryant believes, is that wholesale price increases, combined with the rate freeze, have made it difficult for alternative suppliers to compete with utilities. In 1998, when Pennsylvania began deregulation, low wholesale prices (a PJM average of 1.885(cent)/kWh in April 1998) had suppliers lined up around the block to offer electricity. Since then, wholesale prices have risen 84 percent (to a PJM average of 3.475(cent)/kWh in April 2001) and the number of suppliers has decreased.

In 1998, there were over 30 suppliers serving the residential market, but now there are fewer than ten. In some utilities' territories, such as Allegheny Power and PP&L, competition is virtually non-existent. In January 2001, 50,000 customers were dumped by their competitive suppliers back to their utility. alone, which served about 30,000 residential customers in Pennsylvania, dropped them when it ceased operations in February. In the first quarter of 2001, a net of 19,000 residential (four percent of those who have switched), 14,000 commercial (15 percent), and 700 industrial (23 percent) customers left their alternative suppliers to return to the utilities. In addition, the total load served by alternative suppliers has fallen 20 percent from its peak of 6,150 MW in January.

The complete story is available in the June 4 issue of the Power Observer. Other stories in the latest issue of the Power Observer include:

-- Utility holding companies are battling public power and consumer groups to get stand-alone PUHCA repeal passed in the Senate.

-- Alternative energy gets a boost from an old technology as Stirling (external combustion) engines are poised for a comeback almost 200 years after their invention.

-- Government funding of distributed generation is evaluated with a look at past projects and future plans.

-- California's energy crisis has been a boon to some municipal utilities and a bane to others as energy-rich munis profit from high wholesale prices while energy-poor ones raid the piggybank to fund power purchases.

-- Take a look at the U.S.'s first merchant transmission company, Trans-Elect, and see whether the industry is ready for this maverick.

Energy Info Source's Power Observer is a new, biweekly newsletter for energy industry professionals. A free three-issue trial is available by emailing Energy Info Source at or by calling 888/986-2250. Please indicate whether you would like the trial issue delivered via email or postal mail (North America only). If postal mail, please provide a mailing address.

CONTACT: Energy Info Source, Inc., Lakewood | Jason Penshorn, 303/986-7449 | Fax: 303/986-7478 |

-- Rich Marsh (, June 07, 2001


Very interesting. See articles and my comments from early May on PA power "deregulation" at:

-- Andre Weltman (, June 08, 2001.

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