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Since Pennsylvania deregulated its electricity market in the late 1990s, business customers have been able to choose who supplies their energy while their local utility continues to deliver it. This structure, overseen by the Pennsylvania Public Utility Commission (PUC), promotes competition and gives businesses more control over their energy costs and contract terms.
How Pennsylvania’s Competitive Market Works
Any Pennsylvania business connected to the grid works with three key players: the utility, the supplier, and the PUC. If your facility is located in Pennsylvania, your local utility—such as PECO, PPL, or Duquesne Light—remains responsible for delivering and maintaining service, handling outages, and billing for distribution charges. However, you can choose your Electric Generation Supplier (EGS) for the actual energy supplied. EGSs compete for your business with varied contract terms, pricing structures, and service features. The PUC regulates utilities and suppliers, enforces consumer protection standards, and promotes market transparency to ensure a level playing field.
If you don’t choose a supplier, your utility automatically provides default service at the current "Price to Compare" rate (more on that below).
The result is more control for businesses over their energy costs and sustainability options.
The “Price to Compare” Benchmark
Each major utility publishes a “Price to Compare” (PTC)—its current default rate (average cost per kWh) for customers who have not chosen a supplier. The PTC includes energy and transmission charges and serves as a public reference point for evaluating competitive offers. For commercial users, it provides an objective benchmark. Competitive supplier pricing may fall below or above the PTC depending on timing, load profile, credit, and contract structure. Offers may also include value-added features – such as renewable energy options, data reporting, or dedicated account management - that are not included in the default rate.
Working with up-to-date PTC data helps businesses benchmark offers with clear context, supporting smarter, “apples-to-apples” evaluations.
Opportunities for Businesses
Pennsylvania’s competitive market offers a wide range of options:
- Risk management: Fixed-rate contracts provide budget certainty and hedge against market spikes, while pass-through contracts allow exposure to market pricing for certain cost components when volatility is tolerable.
- Sustainability goals: Many suppliers offer renewable energy products or carbon-neutral contract structures.
- Procurement timing: Aligning agreement dates with market cycles and PTC updates can yield favorable outcomes.
- Contract flexibility: Large users can negotiate custom terms; small businesses can often aggregate locations or loads for better rates.
The broad supplier pool means businesses can structure their energy purchases to suit operational needs—not just chase the lowest price.
Strategic Procurement in Practice
In a dynamic market, procurement is more than a quick rate check. Savvy businesses treat energy contracting as a strategic process: analyzing load data, clarifying contract terms, and comparing bids using consistent definitions for fixed and pass-through elements. Whether you operate a single site or a larger portfolio, timing contract decisions when market conditions are favorable—and using the PTC as a guide—can help lower your exposure to rising costs and ensure good value for your business.
Clarity Leads to Control
Understanding Pennsylvania’s deregulated electricity market helps businesses move beyond price-driven decisions. Catalyst Power® works closely with businesses to untangle contract language, benchmark custom bids, and guide you through the complexities of the competitive energy market. As the market changes and new opportunities arise, having clear information and working together with trusted partners is the best way to make smart choices and keep your business running smoothly.
