PREA - The Pennsylvania Rural Electric Association

Below are answers to some frequently asked questions about how shopping for power, often called "customer choice," really works. Click on the question to see the answer or scroll down for the whole list. A glossary of terms is also found at the bottom of this page.

What exactly is customer choice?	Simply put, it is the ability for consumers to pick the company that generates their electricity. This generation supplier could continue to be your local electric co-op, or any Pa.-licensed supplier willing to sell power in your area.
How will customer choice work?	It’s like choosing a long-distance phone provider. With customer choice, regardless of whether you select a different electric generation supplier, local utilities will still deliver the electricity you buy to your home or business over existing power lines.
When did customer choice begin?	Pennsylvania's electric co-ops allowed ALL (100 percent) of their members to shop for power on January 1, 1999. Because all co-op consumers have the chance to choose, you don’t have to make a hasty decision. You can take time to investigate which supplier option is best for you. (To date, no alternate suppliers are selling in co-op service areas.)
If I'm now an electric co-op member, can I continue to buy power from my co-op?	You sure can. Remember, you have a choice. That means you can choose to keep buying electricity from your co-op and not switch. Your local electric co-op will continue to supply you with electricity at the best available price — just as it does now. In fact, competition has made it possible for non-profit electric co-ops (through their wholesale generation supplier, Allegheny Electric Cooperative) to reduce generation costs to a price as low as competing electric generation suppliers.
Will my electric bill look different?	Yes, it will. Customer choice requires costs to be shown separately. For example, on your bill you may see separate charges for generation (kilowatt-hours purchased), transmission and distribution. In addition, there may also be a line item for stranded costs and special services, like security lights.
How will I be able to "shop" for power suppliers?	You will receive information on eligible generation suppliers from your co-op. Some suppliers may also contact you by phone or mail, or both. To shop for power, you must be current on your electric bill, have metering in place and agree to pay any switching-related charges.
Will competition make electric rates come down?	Competition may cause generation costs to decrease, but no one knows for sure by how much or for how long. Very likely, the amount that Pennsylvania consumers can save will depend on electric use and the plan selected. It is important to keep in mind, though, that generation costs are only part of your total electric bill, so don’t expect any large reductions. Remember, too, that electric co-ops operate on a non-profit basis. This means they will continue keeping rates for delivering power and other services as low as possible.
How much will I pay?	Electric generation is what you will be buying. So compare the cost for generation plus the transmission cost to deliver it to you — called your "price to compare" — to see if it is any lower than you'll be paying your co-op. (Businesses may be billed on their use and demand characteristics.) Also keep in mind that rates may change at different times of the day or at some future date established in any contract you might sign.
Must I sign a contract?	Not necessarily, although in some cases a contract between consumers and generation suppliers may be required. Remember, a long-term contract may lock in a certain price, but it can also lock you out of other savings that may become available during the term of the contract.
Are there incentives for switching?	There may be, but first consider the value of "bonuses" you might receive and beware of possible long-term costs. For example, is a free month of electricity worth it if you end up paying more over the length of a contract? (NOTE: If you're offered a "13th month of generation free," you may have to renew for another year.) Some contracts may include cancellation fees, so read them carefully. The old adage holds true, "the bold print giveth, the fine print taketh away."
How do I know if I'm dealing with a reputable supplier?	Make sure the generation supplier is licensed by the Pennsylvania Public Utility Commission (PUC) and has signed a contract with your local co-op to sell power in your area. If you have questions, contact your local electric co-op.
If I switch suppliers and am not happy, may I switch again?	Yes, subject to the terms of any agreement you may have signed. Generally, a certain period is necessary when you switch suppliers — so your utility and the supplier can adjust billing formats, exchange customer information data, etc. The PUC says that customers may switch as often as they wish, provided they give 15-days notice prior to the meter reading date so the local utility (such as your local electric co-op) can get a final meter reading and transfer the account to a new generation supplier.
What are stranded costs?	An electric company’s investments in things like power plants and power lines become "stranded" when their customers buy generation elsewhere. If the "stranded" amount is too great, that company can quickly become uncompetitive. To recover at least some of these costs without raising rates, utilities may impose a "transition" charge on all customers for a period of time. Co-ops are calling this a "fixed costs recovery charge."
Will all customers, including rural residents, still get electricity?	Yes. Customer choice requires that all customers continue to have access to electricity. It also mandates that all consumers be allowed to shop for the best power deals. Electric co-ops will continue to serve members who choose not to switch as well as those who are not offered power from an alternative source.
What about the reliability of power deliveries?	Bad weather and other unforeseen events — including outages on the transmission lines that deliver power to co-op substations — will continue to be a challenge. However, your co-op will remain people you can count on to keep power flowing to your doorstep.
What if something happens and my supplier can’t generate or transmit power?	Your co-op would then provide electric generation, so your power is not interrupted. The rate you’ll pay for this "back-up" power will be the same as that paid by any other co-op member.
I now read my own meter. Will competition change this?	Possibly. When customer choice starts, co-op members who switch to another supplier may not be able to read their own electric meters. That's because electric generation suppliers may demand more frequent readings than are possible under a self-read set-up. To accommodate certain suppliers, you may need to have an automated meter reading device installed. For specific information about this, check with your local co-op.
Will my co-op continue to be involved in the community?	Absolutely. Co-ops have always provided more than just electricity — things like energy efficiency and energy loan programs. Co-ops are locally owned and controlled. Their employees, managers and directors live and work in the communities they serve. Competition won't change that.
Who do I call if I have other questions?	Anytime you have a question, please call your local co-op. See the PA/NJ Electric Cooperatives Web page for your specific co-op of interest.
Why aren't electric generation suppliers selling in co-op service areas?	There are several reasons. First, the price co-op members pay for generation and transmission service is at or below the market price for electricity. This makes it extremely difficult for a supplier to come in and offer you a better deal. Not many consumers want to pay MORE for power just to switch! Second, electric generation suppliers are in business to make money, so it's natural they will market first in areas where they can make the greatest profit. Their prime targets initially are large energy consumers, such as big industrial and commercial accounts as well as residential customers in high-density communities that have high electricity costs. As the competitive electricity marketplace evolves and all the big loads are scooped up, suppliers will look to rural areas to continue building their market share. Currently, 94 percent of co-op consumers are residential in nature — homes or small businesses.
How soon can I expect real savings?	Savings from a competitive electricity marketplace may not materialize for awhile, although rates should stabilize fairly quickly. The real savings will come over time, as new players bring innovation to the electric industry. Customer choice also will encourage new technologies as well as creativity in marketing and packaging services, providing additional benefits.

To help you prepare for the coming changes, here are some commonly used customer choice terms: