Richard Lentz, a retired mechanic from Salisbury Township, spent a recent morning at the Palace Center in Allentown listening to electric-industry executives discuss the new marketplace in Pennsylvania.

Lentz has already enrolled with Dominion of Richmond, Va., which was among the first companies to offer electricity to residential customers in PPL\’s service area.

But he wanted to hear the pitch of the company hosting the workshop, Direct Energy of Ohio. After the session, Lentz said he plans to stick with Dominion. Even though the plan he selected will cost a little more than Direct Energy, the Dominion plan he picked doesn\’t charge an early termination fee if Lentz decides to take his business elsewhere before the end of a year-long term.

\’\’The one bad thing about Direct Energy is that they charge you 100 bucks to pull out,\’\’ Lentz said. \’\’Dominion doesn\’t do that.\’\’

Lentz underscores the new way Pennsylvanians have to think about the electricity they use in their homes. Rather than just sit back and pay a bill each month to your designated local utility at a rate approved by the state, consumers in the soon-to-be deregulated electricity market will have to do some homework to figure out the best price.

Your local utility will still deliver the electricity to your home and maintain the electric grid. But you can now buy the electricity you consume from a different company.

State-imposed caps on electric rates for PPL\’s 1.4 million Pennsylvania customers will be lifted Jan. 1. PPL will remain the default electric supplier, which means customers who do not pick another company will automatically continue to purchase electricity from PPL.

Residential customers who continue to buy from PPL will see their rates go up 30 percent in January, or more than $30 a month for the typical home. Those with electric heat will see their costs rise even more because they use more electricity. Customers of Metropolitan Edison, which also serves portions of the Lehigh Valley, won\’t see their rates go up until 2011 because the state is lifting rate caps in phases.

Electric companies from around the country have homed in on the newly opened marketplace, and they are increasingly targeting households as prospective customers. Of PPL\’s 1.4 million electric customers in Pennsylvania, about 1.2 million are households. So for retail electric companies, PPL\’s 29-county service area in eastern and central Pennsylvania is fertile ground.

Direct mail from electric companies has already begun to stuff mailboxes, and competing offers are touted over the airwaves. Some companies even plan door-to-door promotions, so you could soon find someone on your doorstep hawking electricity.

So far, figuring out the best deal is a tricky proposition for a variety of reasons.

For one, PPL\’s final price for 2010 has yet to be established. The latest estimate is 10.82 cents per kilowatt hour for residential customers, up from an earlier estimate of 10.55 cents. That price won\’t be finalized until around Friday, according to PPL, at which time comparison will be easier.

The typical home uses about 1,000 kilowatt hours per month, so the typical customer\’s annual bill will be nearly $1,300 in 2010, excluding taxes and fees, according to the latest estimate.

Another reason shopping is difficult is that companies are still entering the marketplace and new offers are being made. Besides PPL, three electric companies are offering service to residential customers in the PPL area. Two others plan to enter the market and expect to announce rates soon. Others could follow.

Direct Energy and Dominion are offering the lowest rates so far for a one-year term. Dominion matched Direct Energy\’s low rates on Friday, but with a lower early termination fee of $50, compared with Direct Energy\’s $100. Dominion is still offering a rate with no termination fee, which costs a bit more than the rates with early termination fees.

\’\’Customers calling our Pennsylvania call center still prefer the (no termination fee) offer, but we have both available,\’\’ Dominion spokesman Dan Donovan said.

Liberty Power, based in Fort Lauderdale, Fla., is offering residential customers one- and two-year terms with fixed prices. But the rate fluctuates daily depending on market conditions, which makes it similar to shopping for a mortgage. So the rate you lock into depends on the day. As of Friday, Liberty\’s price for a one-year term was 9.45 cents per kilowatt hour.

But there is more for consumers to consider than price. Dominion has no early termination fee under one of its plans. Direct Energy and Liberty have early termination penalties.

Liberty\’s early termination fee is based on a formula that considers both the remaining time on your term and the gap between your agreed-upon rate and the market rate at the time you withdraw from the agreement.

Tim LoCascio, a spokesman for Liberty Power, said such termination fees are necessary if companies want to offer the lowest rates to customers who stick to their terms. Otherwise, the company has to charge everyone a higher rate upfront, spreading the cost to all customers for the few who terminate their agreements early, he said.

\’\’That\’s just to ensure that customers who honor their contracts don\’t subsidize customers who do not,\’\’ he said.

But with more companies planning to enter the market, consumers could find a better deal and regret entering long-term agreements with penalties for exiting early.

Two additional companies, ConEdison Solutions of White Plains, N.Y., and MXenergy of Stamford, Conn., said they will offer electricity to residential customers in the PPL market. ConEdison is scheduled to announce its rates and terms Tuesday.

\’\’At this time, we are still working out all of the final details but we\’re confident customers will find them attractive compared to other offers that have been announced,\’\’ said Ritchie Hudson, the company\’s director of government and legislative affairs.

MXenergy said it would be announcing rates soon, with options for six-month and 12-month terms.

\’\’We\’ve been holding back our rates for competitive reasons,\’\’ said Jeffrey Mayer, chief executive officer of MXenergy.

Meanwhile, if you hold off on selecting an alternative energy supplier, you\’ll end up paying a premium to PPL for at least a couple of months. It will take 45 to 60 days to switch to a new company once you enroll, depending on the date your meter is read for your monthly bill.

So if you wait for PPL\’s 2010 price to be finalized and other companies to announce rates before making a decision, you will end up paying the higher PPL rate for a month or two before your change takes effect.

Easton resident Lynn Shigo also attended Direct Energy\’s forum in Allentown, where about 50 people gathered Wednesday morning to learn more about their options. She plans to switch from PPL, but said she is in no rush.

She said she appreciated that Direct Energy did some educational outreach for residential customers, and she likes the rate they are offering.

\’\’I want the best price,\’\’ Shigo said. \’\’I might go with them.\’\’

If you are thinking about switching from your electric company to a new electric supplier or you need additional information on PA electricity visit mxenergy.com.

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Author Bio: If you are thinking about switching from your electric company to a new electric supplier or you need additional information on PA electricity visit mxenergy.com.

Category: Home Management
Keywords: PA electricity, natural gas rates, energy companies, saving energy