Know Your Options for Purchasing Electricity
Posted: November 5, 2012
There have been numerous changes in price structures for electricity since deregulation of electricity generation was completed in Pennsylvania on December 31, 2010. One of the most significant changes is that you can now choose the company that is responsible for the generation and transmission of your electricity. However, you are still obligated to your local utility company for the distribution of the electricity. This deregulation of electricity generation applies throughout Pennsylvania, except for those areas served by the rural electric cooperatives.
Whether you have selected a supplier or opted to remain with your local utility company for the generation and transmission of your electricity, be sure to inquire about the different rate tariffs – or schedules – that influence the amount you pay for electricity. Your local utility company and your supplier probably do not know which rate schedule would be most advantageous for your dairy operation. It’s necessary for you to do some homework to first learn what the options are. Then figure out if any of the options makes sense for your dairy.
Consider the case of a large dairy farmer in Wisconsin. He was able to lower his monthly electricity bill by about $1,000 by switching his milking times so that one of the milkings takes place during the off-peak period as specified in the tariff of his local utility company. He did not decrease his consumption of electricity by making this change, and he did not need to make a capital investment (other than some management time to accommodate the change in milking times) to realize this substantial monthly savings.
Common electricity pricing options in Pennsylvania today are:
- On-peak and off-peak rates
- Real-time pricing (RTP) hourly rates
- Projected day-ahead hourly rates
- Night and weekend rates
- Curtailment rates
- Interruptible rates
If your dairy is on a commercial or industrial rate tariff, you have more options. Also, generally speaking, you will have more options if you have a large on-site electricity generation system so that you can occasionally go off-grid when requested by the utility company.
To learn your tariff options from your local utility company, you can go to the web site http://www.puc.state.pa.us/utility_industry/electricity/rates_tariffs/electric_tariffs.aspx and then click on your local utility company. But be prepared to wade through many, many pages to find the information you want. Perhaps the quickest way to get the information is to contact your local utility representative to find out just what your options are. Also, be sure to contact your selected supplier (if you have one) to learn of the various options available now or when you re-negotiate your contract.
- Professor Emeritus, Ag Engineering