At Hershey Foods Corp. in Hershey, the manufacturing and candy making is done with equipment run by electric motors. Each year, the chocolate company uses as much electricity as a city with 20,000 homes.
And so, when Pennsylvania announced a pilot program in 1997 to allow consumers and businesses to choose their own electric companies, the executives at Hershey were interested. They saw it as a way to cut costs on the 300 million kilowatt hours of electricity it uses annually.
After intensively studying the program, which essentially deregulated the electricity industry, Hershey decided to choose a new electric provider and sought bids. It made the switch in 1999 from GPU Energy and PP&L Inc. to Exelon Energy, an affiliate of PECO Energy Co. in Philadelphia.
Today, Hershey Foods is saving millions of dollars on electricity, according to Don Hornung, energy procurement manager for the company, who said the exact amount of savings "is an internal figure" and is something the company would not disclose.
Hershey's experience with the electric choice program seems to indicate that change is good, when it comes to electricity. But not everyone is comfortable with change, according to Eric Levis of the Pennsylvania Public Utility Commission, which oversees the Electric Choice program.
Even though all 5.3 million electric consumers in the state can now choose their suppliers, only 507,058 have as to date, Levis said. Of those, 94,188 commercial customers and 4,456 industrial customers have changed electric suppliers, representing a fraction of the businesses in Pennsylvania.
Still, Levis is encouraged by the figures, released by the Pennsylvania Consumer Advocate's Office on Jan. 1. At the end of 1999, there were slightly fewer than 500,000 consumers enrolled in the program.
"We're still seeing an increase in the number of customers participating," said Levis. "It's only been a year, and it can be a complicated subject matter for some people."
A higher percentage of commercial and industrial customers have switched electric suppliers, Levis said. That's because businesses use more electricity and stand to save more if they switch to a company that sells electricity for less.
"The businesses were generally more on top of this than many residential customers," said Levis. "For them, electricity is such a large part of their expenses."
Joining the ranks of those who have switched, Levis said, are the Pennsylvania Department of General Services, Pennsylvania State University, the Central Dauphin School District and the Mechanicsburg School District. All have saved money, he said, although he didn't know exactly how much.
And more companies apply every month with the PUC for licenses to sell electricity in the commonwealth, Levis said, despite the fact that some companies have dropped out because of the record heat and drought last Summer that drove up the cost of electricity.
There are more than 104 electric suppliers who have applied to do business in the state, according to the PUC's web site and 101 have received licenses to supply electricity to residential, industrial and commercial customers. Only five have opted not to serve the Central Pennsylvania area.
All but five are licensed to serve Central Pennsylvania's residential, commercial and industrial customers.
Touchstone Energy, a division of American Cooperative Services Inc., Harrisburg, is licensed to provide electricity in the commonwealth, specifically in the areas served by PECO and GPU. With just 3,000 customers, Touchstone is considered one of the smaller firms in the electric business, but the majority of its customers are commercial and industrial businesses, including a few big names.
The company, developed in 1998 by Pennsylvania's 13 electric cooperatives and one in New Jersey, has a oneyear contract to supply electricity to coffee giant Starbucks Coffee Co. for its roasting plant and distribution center in York County. The Starbucks plant supplies the entire East Coast with Starbucks coffee, according to Ben Ricci, director of retail marketing for Touchstone.
Touchstone was also the choice of Rutter's Dairy Inc. when it was looking for a company to supply electricity to about 40 of its convenience stores, as well as its bottling and manufacturing plant in York. Rutter's has a one-year contract with Touchstone.
"We most definitely saved money," said Jeff Crist, vice president of fuel management for Rutter's, declining to say exactly how much. Crist is preparing to seek bids for a new contract for electricity, with the agreement with Touchstone drawing to a close. Crist expects Touchstone to bid and is considering staving with the company.
As for Touchstone, the company is "prospecting" in the Philadelphia area now, looking for additional customers, said Ricci. The small cooperativeowned company is successful, he said, because it is responsive to its customers.
"We were persistent," he said. "We're very hands-on. I think that made the difference."
At Hershey Foods, meanwhile, the only difference that has resulted from the change is that the company is saving money, according to Hornung.
"We don't see any difference in service or reliability." he said. The new electric program serves more than 30 Hershey Foods locations in Central Pennsylvania, he said, including the main chocolate plant in Hershey and manufacturing and warehousing centers in Lancaster, Hazleton, Mechanicsburg and Reading.
Hornung is preparing now to rebid the Hershey Foods electricity contract. He said electricity prices are higher than last year at this time, primarily due to the record heat and drought last summer that boosted the cost of electricity.
He foresees the construction of more electric-generating plants in Pennsylvania to serve the demand for cheap electricity, which will then drive costs down.
"It'll start to behave like a regular market," said Hornung.
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