All this talk of competition may give the impression that Pennsylvania electricity industry has been freed from all regulations and consumer protections. But this is a misconception, as there are many regulations, utilities and licensed competitive suppliers must follow. Some of the regulation focuses on promoting conservation and energy efficiency, but these programs come at a price.

In 2008, the General Assembly passed Act 129, which requires utilities to decrease their power consumption by 1% by 2011 and 3% by 2013, based on 2010 consumption standards. To accomplish this, many utilities have launched customer initiatives- like WattWatchers for Allegheny Power customers, or PPL?s Appliance Recycling Program. The latter gives customers $35 for replacing a working refrigerator or freezer with a more energy efficient one.

Another element is the implementation of smart meters by 2023. For example, PECO is planning to install 100,000 smart meters at a cost of $210 million and another 600,000 costing $290 million between 2010 and 2012, their first step towards universal deployment.

The timing of installation for these meters may vary, but the basic idea is to give every consumer in Pennsylvania an instant window into how much electricity they are using and at what cost. With the ability to immediately adjust behaviors in response to the hourly price of electricity – utilities hope consumption will decrease. Consumers should keep these state initiatives in mind as they shop for cheaper electricity. This new technology could contribute to significant savings in the next 10 years.

On the downside, taxpayers will be subsidizing these temporary conservation programs. Most utilities are recovering the installation of smart meters through a customer surcharge. In the end, all consumers regardless of their desire for a smart meter will bear some cost. The PUC requires the cost of these conservation plans not to exceed 2% of utilities total annual revenue. Total annual budgets for all seven major utilities are estimated to be a maximum of $240 million.

Placing a mandate on a utility with limited control over its consumer?s behaviors is really an attempt to dictate the behavior of consumers and it?s a slippery slope.

The problem is not that consumers do not care about the environment or do not want to conserve energy, the problem is that our electricity rates have been subsidized for so long that we have become unaware of the real costs of our ever increasing consumption. Today, thanks to deregulation, we are paying the true price for electricity- and thanks to competition it?s not as high as was expected

These conservation mandates are now artificially increasing electric bills to reduce consumption, but there is a better way. The market is naturally designed to increase prices when demand or consumption rises. This is a powerful signal to consumers to conserve. In a market, energy conservation measures should be up to individual customers. In other words, the smart meter implementation plans should be optional, with those participating reaping rewards.

Nevertheless, consumers should be aware of the new energy conservation tools at their disposal. Contact your utility for more details on rebate programs and smart meter implementation plans.