PPL bills go lower thanks to cheap gas
February 19. 2013 1:46AM
Natural gas futures slipped to $2.32 per 1,000 cubic feet in January, their lowest levels since 2002, and Tuesday closed at a still-low $2.62 per 1,000 cubic feet.
Reflecting lower natural gas prices, PPLā??s quarterly rates for residential customers buying their power will drop from 7.769 cents per kilowatt hour to 6.935 cents per kilowatt hour starting March 1, bringing a savings of $8.34 for the typical residential customer using 1,000 kilowatts of power per month. Small-business customers will see rates decline from 6.775 cents per kilowatt hour to 6.387 cents per kilowatt hour.
PPL customers have seen generation rates decline each quarter since rate caps were removed in January 2010. PPL customers were then paying 10.44 cents per kilowatt hour.
ā??It has everything to do with natural gas prices going down,ā? PPL spokesman Kurt Blumenau said. ā??Natural gas has taken over for coal as a generator of wholesale electricity costs.ā?
PPL has not built any new natural gas power plants or converted existing plants to run on natural gas, but the rates reflect a reduction in the price PPL pays for the power it receives through PJM Interconnect, a regional power grid supplying electricity in 13 states, Blumenau said.
The drop in the price of natural gas stands in sharp contrast to heating oil and gasoline. Heating oil currently costs $3.05 at the New York harbor, about the same as it did in January 2011, but more than double the price in January 2009, and the national average price of gasoline was $3.57 per gallon on Tuesday, the highest price ever for this time of year.
The drop in PPLā??s rates affects only those who purchase their power directly from the utility. According to PPL, more than 586,000, or 41 percent of its customers now purchase their power from an alternative energy supplier.
Blumenau said the move of those customers to other power generators does not affect its bottom line because PPL does not make a profit on the power it generates and does not charge extra fees on power supplied by other generators. Instead, the company earns its profits through distribution fees.
The Public Utility Commission last approved an increase of 4 percent in PPLā??s power distribution rate in December 2010, raising the monthly bill $5.06 for an average customer using 1,000 kilowatt hours per month. The utility has no applications to raise the rate before the PUC at this time.
Perhaps an unintended consequence of falling electricity rates has been to drive customers away from PPLā??s time-of-use program. Approved by the PUC in December 2010, the payment plan charges a lower rate for electricity consumed during times when demand is low than when demand is high.
But as regular generation rates fell below even the off-peak price levied through the time-of-use program, customers returned to the regular rate program or switched to other power generators, Blumenau said. And with fewer customers in the program, the rates PPL paid for power purchased through the PJM interconnect for those customers also rose, forcing the utility to freeze rates for customers in the program last year. Currently, only about 3,300 of PPLā??s more than 1.4 million customers participate in the program.
Blumenau said PPL is working with the PUC to improve the program and make it a more viable option for consumers.
ā??We went back to the drawing board to say, how can we make this work better,ā? Blumenau said.