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Reducing
Electricity Demand
During Peak Periods
The
price you pay for electricity during high demand days
is not always what it actually costs your electricity
provider. The following questions and answers have
been developed to educate you about ways you can
reduce your electricity use when demand for
electricity is the greatest, often during hot summer
days.
This effort is important for two reasons.
First, cutting back on your electric use will
reduce your electric bill and will help to ensure
there is enough electricity for all consumers.
Second,
by controlling your energy use, you can help reduce
the wholesale price that your provider pays for
electricity,
especially during times of peak demand.
The following questions and answers will
help explain
electricity pricing and ways that consumers can
use energy wisely.
Frequently
Asked Questions
How
can I save electricity and money?
To
save electricity, money, and help protect the
environment, here are some things you can do:
Turn off the lights, televisions, computer and
monitor, and other appliances when they are not in
use;
Turn up your air conditioner to the highest
comfortable setting (78 degrees is suggested);
Use the microwave or convection oven instead of
the oven or range whenever possible;
Purchase and use compact fluorescent
lightbulbs;
Set the thermostat on the water heater to a
lower temperature, such as 120 degrees;
Avoid using a second refrigerator, if possible.
If you do use one, avoid keeping it on in the
garage or other locations that get hot and humid
because the refrigerator will have to work harder to
keep cool;
Wrap your older electric water heater in an
insulating blanket (older heaters usually were not
insulated);
If
you are in the market for new appliances or equipment,
buy EnergyStar (www.energystar.gov)
products for your home or business.
Energy Star rates appliances based on their
energy efficiency.
EnergyStar products and compact fluorescent
lightbulbs may cost more than other products, but you
will actually spend less money on your electric bills
over time.
What is an Electricity Provider?
An
Electricity Provider is a company that provides
electric generation supply to a consumer.
Under Pennsylvania’s Electric Competition
Act, an electricity provider can be an electric
distribution company (EDC) or a licensed electricity
generation supplier (EGS).
Do electric distribution companies and electric
generation suppliers offer the same price for
generation service?
Not necessarily.
EDCs and EGSs may charge different prices for
generation service.
The rates that EDCs charge were set during the
EDCs restructuring cases before the PUC.
EGSs set their own prices based on market
conditions.
Why does an Electricity Provider pay more for
electricity on peak days?
In any competitive market,
as demand for a product increases, so does its price -
electricity is no different.
During times of high electricity demand,
companies have to use more costly forms of generation
to produce power to meet consumers’ needs. This increases the wholesale price that your
electricity provider pays for electricity.
Why is the price I pay for the generation of
electricity different than what it costs my
electricity provider?
The
price your electricity provider pays depends on many
factors, including where and how the power is
generated, the type of power contract, and the demand
for power. The
price you pay may differ from the actual cost for a
variety of reasons:
If your electricity provider is your EDC,
the generation price is set by the PUC.
This generation price is the same for all
customers on the same rate.
As a result of the electric restructuring cases
in Pennsylvania, rates are “capped” for a set
period of time. This
means rates cannot go above a certain level, no matter
what your EDC pays for generation, unless the PUC
approves an increase.
If your electricity provider is an EGS,
the price is set based on many factors.
EGSs consider market conditions, the amount of
power customers use, fuel type, terms of their
agreement and other services they may provide.
These prices are not subject to PUC review. EGSs must notify you before they make any changes to the
terms of your contract.
What is peak demand?
“Peak
demand” is the greatest need for electricity
during a certain time period.
Why are we sharing this information with you now?
A lot
has changed in the electric utility industry in recent
years. It
is important that all consumers understand that the
prices they pay for electricity are sometimes less
than the actual cost to produce it.
By reducing electricity usage, you can lower
demand, which in turn reduces the cost to produce it.
Over the long run, this can directly benefit
you by encouraging competition, maintaining
reliability, helping the environment and saving you
money.
Will Pennsylvania face the kind of electricity
shortages other states are having?
The summer energy
needs for Pennsylvania have been forecasted. Industry
analysts have determined that Pennsylvania has enough
electric generation supplies to meet consumer needs
while maintaining a reserve for emergencies.
Still, on extremely hot days, unexpected
problems can limit electric generation supplies.
Transmission equipment failures or generation plants
going out of service because of breakdowns or weather
related incidents might increase the need for
consumers to conserve electricity.
There
is a lot of excellent information about energy
efficiency and saving on your utility bills on the
following websites: www.ase.org,
www.aceee.org, and
www.eren.doe.gov/energy_savers/
. You may
also want to visit www.electrichoice.com,
or the Office of Consumer Advocate website: www.oca.state.pa.us
to find information about choosing a new electricity
supplier or other information about the ElectriChoice
program.
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