At PECO, we want to make sure customers understand what is impacting their bill. Seasonal temperatures, changes in rates, and the cost of electricity and natural gas are all factors that may lead to fluctuations in energy bills.
Safely delivering the energy our customers need is critical, but at PECO, managing the cost to customers is also important. Here’s what we’re doing to manage the price of the natural gas and electricity we purchase on behalf of our customers.
First, it’s important to know that a customer’s bill is made up of two main parts – a delivery charge and a supply charge. Learn more about your bill through the following video.
- The delivery charge, or the portion of the bill that covers PECO’s costs to deliver natural gas or electricity, is about half of a residential customer’s bill. This allows us to continue investing in reliability upgrades and programs to better serve our customers.
- The supply charge is the portion of the bill that accounts for the actual natural gas or electricity that is used by a customer. Supply can be purchased through a competitive energy supplier or from PECO. When purchased from PECO, these costs are passed along to customers at exactly the cost that PECO pays, without a profit mark-up. These prices change quarterly and more information about current and future rates can be accessed through the electricity and natural gas Price to Compare pages.
Let’s first look at natural gas:
Natural gas costs fluctuate based on many factors – but we work hard to control costs, reduce price volatility, and purchase natural gas at the lowest price possible for customers.
This is done, in part, through a hedging program (locking in prices) to purchase our natural gas supply incrementally at fixed prices based on future costs and also by filling storage facilities during the summer months when natural gas prices are typically lower. These costs change daily, as market prices change.
Now, from an electricity perspective:
PECO does not generate electricity, rather we purchase the lowest cost electric supply for customers by buying power in the spring and fall through competitive bidding processes for one- and two-year fixed-price contracts.
Every six months we replace about 35 percent of expiring contracts with new contracts. This staged approach helps smooth out price changes over time. This is a strategy that has been successful in reducing customer supply price volatility for years and has avoided dramatic price increases when severe weather has occurred or with the recent increases in energy prices.
While we work to keep energy supply prices as low as possible, there are things every customer can do in this environment to gain control over their energy use and costs to save money. This includes:
- Using energy as efficiently as possible and monitoring usage,
- Signing up for energy efficiency programs, and
- Taking advantage of financial assistance and bill relief programs.