Markets · Analysis
I.How PECO buys the power it does not make
PECO runs competitive solicitations, a kind of sealed auction, to line up the electricity it needs for default service customers. It does not buy all of that supply at once. The utility buys it in blocks, staggered across different auctions held months and sometimes more than a year before the power is delivered, so that no single bad day in the market sets the whole price. Wholesale suppliers submit bids to serve a share of the load, and the lowest qualifying bids win.
Winning bids get blended together into the generation charge, the part of the bill the Price to Compare describes. For residential customers that rate is reset on a schedule, roughly every three months at last public report, rather than drifting day to day. Each reset is an average of contracts signed at different times, which is why the number can move even in a quiet market.
II.Why last winter can show up this fall
Contracts bought ahead are the reason a cold week two seasons back can still be riding on this month's bill. When a snap spikes wholesale prices, the hit does not land on you that week. It gets absorbed into supply blocks that settle and roll into the Price to Compare one or two resets later, smoothed but not erased.
PJM Interconnection, the regional grid operator that runs the wholesale market across Pennsylvania and twelve other states, adds a second lag through its capacity auction (the yearly process where the grid pays power plants to promise they will be available in a future delivery year). The most recent capacity auctions cleared far above prior years, by most public accounts, and those costs work their way into supplier bids and, eventually, the generation rate. How much and exactly when is the honest uncertainty here; it depends on when PECO's blocks were bought and how the auctions clear.
III.Who sets the rules, who takes the risk
Approval of the whole arrangement sits with the Pennsylvania Public Utility Commission, which signs off on PECO's default service plan, the auction design, and the rules for passing costs through. PECO earns its regulated profit on delivery, the poles, wires, and meters that carry the power to the block, and not on the generation charge, which it passes through at cost.
Suppliers who win the auctions carry the price risk between the day they bid and the day the power flows. For a reader who wants to check the work, PECO's default service docket at the commission posts the plan and the solicitation results, and the state's PAPowerSwitch site lists the current Price to Compare next to supplier offers. Hold either one against the generation line on your own statement.
IV.Worth watching this month
1. PECO's next scheduled Price to Compare adjustment, which at last public report lands roughly quarterly, is worth checking against the generation rate on your current statement.
2. The PUC's default service docket for PECO is where each solicitation's results and any plan changes get posted, usually soon after an auction runs.
3. PJM's capacity auction results and schedule matter here, since the latest clearing prices are the ones that will feed supply costs over the coming delivery year.
4. PAPowerSwitch, the commission's shopping site, shows the current Price to Compare beside supplier offers, so a reader can see whether shopping actually beats default service this quarter.
5. Any PECO default service rate filing at the PUC is routine most quarters, but worth a closer look when a hearing or comment window is noted.
Frequently asked questions
- Does PECO make money on the Price to Compare?
- No. The generation charge is passed through at the cost PECO paid in its approved auctions. PECO earns its regulated return on delivery, the poles, wires, and meters, not on the power itself.
- Why did my generation rate change when I did nothing?
- PECO's default service rate adjusts on a schedule, roughly quarterly at last public report, as new supply contracts roll in. The new number blends auction blocks bought at different times, so it can move up or down without any change on your end.
- Should I switch to a competitive supplier?
- It depends. Compare a supplier's rate and terms against the current Price to Compare, and watch for teaser rates that reset after a few months, plus any cancellation fees. The state's PAPowerSwitch site lists the comparison in one place.
- Where can I check the auction results myself?
- Look up PECO's default service docket at the Pennsylvania PUC, where the plan and solicitation results are public. You can match the approved supply costs against the generation line on your own bill.
Sources on the bench
Pennsylvania Public Utility Commission, default service The state regulator that approves PECO's default service plan and auction rules; search the PECO default service docket for plan filings and solicitation results. · www.puc.pa.gov
PJM Interconnection, capacity market The regional grid operator; its Base Residual Auction (capacity auction) pages show the clearing prices that feed into supply costs across the region. · www.pjm.com
PAPowerSwitch The PUC-run electric shopping site; lists PECO's current Price to Compare next to competitive supplier offers for the same service area. · www.papowerswitch.com
PECO, Price to Compare The utility's own page explaining the Price to Compare and how its residential generation rate is set and adjusted. · www.peco.com
PECO, electric default service and supplier choice PECO's explanation of how it procures default service supply and how shopping with a competitive supplier works. · www.peco.com
U.S. Energy Information Administration, Pennsylvania Federal energy data for Pennsylvania electricity prices, useful context for where the generation rate sits over time. · www.eia.gov