Benefits of Deregulated Energy in Pittsburgh

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Category: Home Utilities
Posted on: 05/13/2021
Pittsburgh lit up at dusk near the Ohio, Allegheny, and Monongahela Rivers

Pittsburgh residents are among a select group of energy consumers who have the opportunity to choose their own electricity and natural gas providers. The city is part of Pennsylvania’s deregulated energy market. In a deregulated energy market, local utilities own and maintain the infrastructure, while licensed retail energy providers (REPs) sell and supply electricity and gas to their customers.

In Pittsburgh’s deregulated energy market, Duquesne Light Co. delivers the electricity you’ve purchased either from them or any other provider to your home; the utility reads your meter and takes care of any issues that may occur with transmitting the power. This is why your electric bill in Pittsburgh is now unbundled. You pay for two separate services on your bill, split up into two sections: the delivery charges (Duquesne Light Company Basic Service Charges) and supplier charges.

Energy Market Deregulation in Pennsylvania

Deregulation of Pennsylvania’s energy market began in 1996 with the Electricity Generation Customer Choice and Competition Act. It eventually allowed Pennsylvania residents to choose their own electricity provider. With the initiation of a pilot program in 1997, more and more electricity customers in the state could switch to an alternative electric provider. By January 2000, all Pennsylvania residents could choose their own provider.

In 1999, the Pennsylvania natural gas market was also getting deregulated with the Natural Gas Choice and Competition Act. By July 2000, gas distribution was unbundled from the supply, and Pennsylvania residents could choose their own gas supplier from several licensed retail energy providers.

Before the energy market was deregulated, Pittsburgh residents purchased their electricity from Duquesne Light Co. The utility had an electricity monopoly and controlled the electric rates in the city. Consumers had no choice but to pay the prices mandated by the utility. 

Pittsburgh Energy Customers Benefit from Competition

After the Pennsylvania energy market was deregulated entirely, competition was introduced and increased steadily. Pittsburgh energy customers can now choose from several licensed retail electricity and natural gas suppliers with different plans and rate structures. A wider range of options makes it easier for you to find a plan that works for your personal situation, rather than having just one or sometimes two different rates to pick from. Utility companies and alternate suppliers now offer incentives to switch or discount and loyalty programs for their existing customers. New customers can often get benefits, such as rebates, free energy audits, waived sign-up fees, low introductory rates, or variable service duration terms. With multiple retail providers available in Pittsburgh, customers can continuously benefit from these programs. 

Save Money on Your Energy Bills

While competition often drives down prices, the energy sector mainly knows increasing prices. With competition in deregulated markets, not only can you switch to a cheaper supplier, but the increase of energy rates in Pittsburgh has slowed down altogether. As new energy suppliers enter the Pennsylvania market, they offer competitive rates to attract new customers. You can benefit from the deregulated energy market by comparing rates every time your contract runs out and switch to a different supplier if they offer cheaper rates.

Most deregulated states already had higher than average electricity prices when they deregulated their markets, and deregulation effectively slowed down rate increases. EIA data suggests that, between 1997 and 2018, the average revenue from residential electricity sales across deregulated states increased by about 46.5 percent. In regulated states, electricity sales revenue increased by over 61 percent during the same time frame. 

Improved Customer Service 

Since one of the benefits of deregulated energy in Pittsburgh is the power to switch suppliers, energy companies are working harder to keep their customers. One of the benefits of a deregulated market is better customer service. As in regulated markets, utility companies held monopolies for servicing the customers in their respective areas. Residents were forced to purchase their energy from them. Retail providers and utilities now offer better customer service to keep their Pittsburgh customers and attract new ones. Many energy providers even advertise with their customer service quality.

More Plans and Rate Structures

While more competition led to lower prices, retail energy providers and utilities also introduced different plans and rate structures. Pittsburgh residents can now choose among various providers, which offer different plans. You can pick the plan based on the rate structure, term length, time and days of using energy, and other options. You can also select your preferred energy source and purchase a certain amount of renewable energy or chose between fixed and variable rates, based on your usage and your willingness to take a risk to get cheaper rates.

Access to Green Energy Plans

As the third-largest coal-producing state in the nation, Pennsylvania has generated 21 percent of its electricity from this dirty fuel in 2018. Even though the use of coal is declining fast, the amount of green energy generated in Pennsylvania is still small.

As a benefit of the deregulated energy market, Pittsburgh residents can choose green energy plans from alternate suppliers. Electricity customers in Pittsburgh even have the choice to pick from multiple green power plans, making renewable energy more affordable than ever. 

Reliable Energy Supply

Older energy customers may still remember the natural gas shortage in the mid-1970s, which closed many stores and factories in Pennsylvania and, in some states, even schools and government offices. More competition in the natural gas and electricity markets and regulation focused more on energy security has led to improved energy infrastructure. According to a study by the Kleinman Center for Energy Policy at the University of Pennsylvania, operational efficiencies of energy generators have improved with deregulation. As more energy markets were deregulated, reactor outages have been reduced from 11 percent in 1996 to less than 7 percent in 2015. Other benefits include increased thermal efficiency and a decrease in non-fuel generation costs.

All retail energy providers and utilities in Pennsylvania are licensed and regulated by the Pennsylvania Public Utility Commission (PUC). If a retail provider goes out of business, customers will automatically switch to the local utility’s default service without any interruption of service. Regulation is also driving innovation, especially in energy distribution, which further improves the reliability of our energy supply.

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