Natural gas prices driving competition in electricity markets

Pennsylvania and New Jersey, two Mid-Atlantic states that suffer from the highest electricity prices, could see some relief as natural gas prices continue to come down, according to The Philadelphia Inquirer.

Eastern Pennsylvania utility company PPL Electric Utilities announced recently that it would be offering lower electricity rates as it adjusted prices to the recent changes in the natural gas market.

Meanwhile, all four utilities in New Jersey are set to see lower electricity prices by June of this year for the same reason.

Though these changes will not affect the distribution charges that utilities impose for using their power lines, they could still substantially reduce electricity bills. They will even put substantial pressure on electricity providers as they strive to offer electricity rates below those available from the utility companies.

“There’s no real magic here,” Dennis Urban, PPL senior director of rates and regulatory affairs, told the Inquirer. “It’s just the structure and timing of our procurement process.”

The U.S. Energy Information Administration reports that both Pennsylvania and New Jersey rely on natural gas for a major proportion of their electricity, 20.7 percent and 37.9 percent in 2010, respectively.