July 17, 2015
You may have noticed the last few weeks that the Allegheny Front has a new voice. Lou Blouin joined our staff from Michigan back in May. And after living in a sublet for the first few months, he’s finally getting settled into an apartment over on Pittsburgh's Northside. One of the great things about the apartment is that other than the rent, he’s just going to have one other bill: his electricity. But Lou found out that choosing an electric provider in Pennsylvania isn’t quite as straight forward as it was back in Michigan.
* * *
The idea that I would have a choice of companies never even occurred to me. Back home in Michigan, a single utility has a monopoly over your whole area. And you’re stuck with them. Here in Pennsylvania, though, it’s a whole different ballgame.
“This is what’s interesting about the electric industry,” says Greg Reed, the Director of the Center for Energy at the University of Pittsburgh. “There are no national rules or policies, so it really varies state by state.”
Greg was kind enough to help me navigate the process of choosing an electric supplier. First, he took me to a website called papowerswitch.org, which is run by the Public Utility Commission of Pennsylvania. It basically looks like healthcare.gov, but instead of comparing different health insurance plans, you can shop competing electricity providers. You pop in your zip code, and the website finds all the energy suppliers that are available to you. In my case, there were—get this—79 different plans.
I still find the sheer volume of choices sort of dumbfounding. Coming from a state where there are still monopolies in the energy industry, I had to wonder—how did Pennsylvania end up with so many choices, while in Michigan there’s, like, one? Greg says, it boils down to one word: deregulation.
“You look at the history of the industry, and it dates back to the early 1900s, and for 90 or so years it was a very monopolistic enterprise.”
So, back before deregulation, basically one local utility would own all the wires needed to get electricity to your house—and own the power plants that made the electricity. But a lot of consumers and utility commissions thought that was too monopolistic, and they wanted to open the market up to competition. That started to happen in the mid-1990s; Pennsylvania deregulated its energy markets in 2011.
“Essentially what happened there was generation assets were decoupled from transmission and distribution assets,” Greg says.
In other words, local utilities would still own the wires, but other companies could actually make your power. And that led to an explosion of new power companies on the generation side in the 1990s—hence the 79 different choices I now have to sort through at papowerswitch.org.
But getting back to the business of actually choosing one: Well, I did what most people would do when faced with a huge pile of consumer research that they didn’t really want to do—I asked a friend what he does. My neighbor Bill O’Driscoll did a bunch of research into all this a few years ago when he chose a renewable electricity supplier—which was something I was interested in.
“It was a lot easier then because there were fewer suppliers of renewable energy,” Bill says. “There were maybe 11 at the time that you could choose. And I went at that time with, I think, it was called TriEagle. They were based in Texas, but they somehow supplied energy to the regional grid around here."
A few years into deregulation, when there were even more choices, Bill shopped around again. Now, he’s with a company that gets its wind power from Pennsylvania. And the rate is pretty good—about 10 cents per kilowatt hour. But you have to wonder what you're actually buying when you choose one of these renewable providers. I mean, does the wind power company I choose, which might be all the way in Texas, actually have a way of sending the electrons they’re making for me all the way through the grid to my apartment in Pittsburgh? Greg Reed says it doesn’t really work that way.
“Generation from all over the country is created and injected into the transmission system. Once it’s in the transmission system, the laws of electrical physics take over and those electrons go where they need to by the path of least resistance. But we really can’t say that an electron made at a wind farm in eastern Pennsylvania or even in Texas, for example, really ends up in our home. There’s absolutely no way to track that.”
So what you’re buying, Greg says, is really more of a virtual product. It’s an assurance that somewhere more renewable energy is coming onto the grid because of your personal demand for it. And so many consumers are making choices like these, it’s actually starting to impact the grid—in both good and bad ways.
“It does start to impact the economics to the extent that we’re starting to dip into levels where we have to back off base-load generation on certain days because there’s that much more aggregated renewables in the system. Turning large fossil plants on and off is not what they were designed to do and it becomes very expensive. And overall, the aggregate energy supply cost could actually become higher.”
Greg says the grid will need some major updates to accommodate this new renewable energy, not only from large-scale suppliers, but from the smallest power plants—like homes with rooftop solar systems. He says it’s all part of a wave of consumer participation that’s slowly but radically altering the energy grid. For me, I’ll definitely be part of that wave. But I’ve still got a little research to do.