All electric customers in Pennsylvania have had the right to choose their electric supplier since the Electricity Generation Customer Choice and Competition Act (the "Act") was signed by Governor Ridge in 1996. The Act required Pennsylvania electric utilities to break apart their previously "bundled" electric service into four components:

The Act also required each utility to cap their generation rates thru the end of the Transition Period. Electric utilities protected themselves against fuel price increases over the Transition Period by entering into long term contracts for coal, oil, natural gas and uranium.

PA electric consumers could select a company, other than their utility, to provide the "Supply" components of their electric service. However, shopping activity quickly dropped off in the early part of this decade as wholesale electricity prices rose in response to rising fuel costs (see chart). Alternative energy providers could not buy or generate power at prices less than the capped utility rates.

Finally, the Act requires utilities to continue to sell customers electric generation if they do not choose an alternative provider. This responsibility is called Provider of Last Resort Service (POLR). PPL Utilities, which removes its generation rate caps on January 1st, 2010, has already purchased a sizeable percentage of the POLR electricity the utility believes it will need to deliver in 2010. The utility's first three wholesale auctions resulted in a price for 2010 POLR electric generation of 10.654 cents/kWh (read more). First Energy Corporation (parent company of MetEd and Penelec), Allegheny Power and Exelon are all awaiting approval by the PA Public Utility Commission of similar auction proposals that will set their POLR generation prices once their caps are removed on January 1st, 2011