Low NatGas Prices Translate to Electricity Rate Cut by Peco

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Yet another Pennsylvania utility is lowering rates customers pay—this time it’s a rate cut for electricity by Peco Energy which supplies the Philadelphia area. Low cost natural gas is being used in electrical generating plants and the utility is passing along the lower cost to produce electricity to its customers, thanks in part to an abundant supply of Marcellus Shale natural gas.

Peco Energy Co. will substantially decrease its supply charges on July 1, just in time for the summer cooling season.

The Philadelphia utility says that residential generation charges will go down about 12 percent from current prices. Commercial customers will see even bigger reductions, about 13 percent for small businesses and more than 19 percent for medium-sized commercial customers.

The price estimates, which Peco submitted to the Pennsylvania Public Utility Commission on Monday, are the latest evidence of how consumers are benefiting from record low prices for natural gas, which is used to generate electricity.

While gasoline prices are higher this year because of the rising worldwide price of a barrel of crude oil, natural gas prices are moving in the opposite direction. Natural gas prices are set by a domestic market that is oversupplied because of low demand from the mild winter and an abundance of production from new sources, such as Pennsylvania’s Marcellus Shale formation.*

*Philadelphia Inquirer (Apr 3, 2012) – Peco to cut summer electricity charges