Why is PPL's rate higher than other electric suppliers?
As many PPL customers struggle with high electric bills, a common question that viewers are asking News 8 On Your Side has to do with pricing.
Why is PPL charging its current price of 14 cents per kilowatt hour while other providers available through PAPowerSwitch.com can offer a rate that is several cents lower?
PPL is a default supplier. Met-Ed and PECO are other examples of default suppliers.
The state code outlines the obligations of a default provider.
As a default supplier designated by the state, PPL is required to be able to provide power to all customers at all times. It must secure a power supply well in advance of when it's to be used.
Contrary to what many people believe, PPL Electric Utilities does not own any power plants. That's why it has to purchase electricity on the open market well in advance of its use. PPL is required to purchase a combination of short-term, mid-term and long-term contracts.
On the other hand, the lowest-priced suppliers you find on PAPowerSwitch.com can buy and sell power as they choose on the spot market with no time constraints involved.
They can get a great deal on a power supply, sell it at a lower cost and make a profit.
And remember, none of the default suppliers care where you get your power.
They make their money on transmitting the power to you and operating the electric distribution system.
Related video below: How to shop for electric rates