All across the country, state legislatures, public utility commissions, and even the federal government are looking for effective ways to deregulate the electric utility industry. In many states, the generation of electricity is already open to competition, allowing customers to choose the company that produces or supplies their electricity.

In our area, customer choice has been implemented in Maryland, Ohio, Pennsylvania, and Virginia. Although active markets have not developed in all states, customer choice should bring more opportunities and more choices than you ever had before.

The following is an introduction to electricity deregulation. It explains how electricity is generated and delivered to your house, and how you pay for the electricity you use. When the time comes for you to make a decision about your electricity supply, we hope this fact sheet will help you to make an informed choice.

How You Get Electricity

Electricity is produced and delivered to your home or business in three basic steps:

1. Generation: First, electricity is produced or generated at a power station using fuels that include coal, oil, natural gas, nuclear, hydroelectric, solar, and wind. Electricity providers either generate the power themselves at power stations they own, or they purchase it from other providers and re-sell it to consumers. These companies generally are called electricity suppliers.
   
2. Transmission: Electricity generated in a power station is delivered from the station by way of high-voltage transmission lines, usually mounted on large wooden poles or steel towers, out to the communities where it is used by homes, businesses, and factories.
   
3. Distribution: When electricity is delivered close to where our customers live and work, its voltage is reduced and it is transferred to smaller distribution lines which carry it to houses and businesses.

Local utilities provide a reliable flow of electric service by employing linemen, electricians, and other personnel who maintain lines and equipment. They also employ meter readers to collect information about your use of electricity, and other employees involved with calculating and issuing bills. All of this is currently included in the distribution portion of your bill.

How You Pay for Electricity

Allegheny Power issues you a bill that shows the amount of electricity you use, measured in kilowatt-hours (kWhs). This number is multiplied by the price you pay for supply and delivery. Taxes and other applicable charges are added to complete your total bill. (For commercial customers, the price may also include charges for the peak rate of electricity use, called demand.)

Traditionally, you paid one price that included all of the costs of generating the power, delivering it to your home or business, maintaining reliability, and other expenses such as accounting, meter reading, and billing. In other words, Allegheny Power was responsible for both the supply and the delivery of your electricity.

Under deregulation, the electricity supply is being opened to competition, so you have a choice of the company that supplies you with electricity, even though it is still delivered to you by Allegheny Power.

Because you may now be served by a supplier that is separate from your delivery company, your total electric bill has to be broken into parts to separate the cost of supply, which includes transmission, from the cost of distribution. If you choose a new energy supplier, you will pay the supply prices offered by that supplier, plus regional transmission charges, and the delivery prices of Allegheny Power. These are not new charges. You are still paying for the same services you always received, but your bill is "unbundled" into separate parts.

Shopping for a Supplier

If competition has brought an active market to your area, you may want to shop for a new electricity supplier. You can begin by contacting your state utility commission (see below) for a list of suppliers serving your area. Then, call one or more of the suppliers to get their prices for electricity supply and transmission.

Compare those prices to Allegheny Power's "price to compare," which is printed on your electric bill. If the supplier's price is lower than your price to compare, you will probably save money on your electric bill.

The following worksheet will help you compare electricity suppliers:

Name of Supplier

(1) Allegheny Power "price to compare"

(2) Supplier's price for generation and transmission

Subtract line (2) from line (1)

If you decide to make a switch, call your new supplier and sign up for service. The supplier will contact us, and we will transfer your account.

Allegheny Power will continue to deliver safe, reliable electric power to all of our customers, regardless of the electricity supplier they choose.

If you have questions about electricity deregulation and customer choice, you can call Allegheny Power toll-free, any time of day or night, at 1-800-Allegheny (1-800-255-3443), or visit our web site at www.alleghenypower.com. You can also contact the public utility commission in your state:

Maryland Public Service Commission
1-800-800-4491
www.md-electric-info.com

Pennsylvania Public Utility Commission
1-888-782-3228
www.utilitychoice.com

Virginia State Corporation Commission
1-877-YES-2004
www.yesvachoice.com