Academic explanations, however, have done little to persuade industrial customers. Their attention is focused on energy companies' skyrocketing profits.
The story is similar at Exelon Corp., the parent company of Philadelphia-area energy company PECO. Exelon reported its profit on electricity sales in the second quarter of 2007 was $35.97 per megawatt, compared with $26.43 a year earlier -- an increase of 36 percent.
Sensitive to the scrutiny such numbers invite, PPL and Exelon insist any contribution marginal pricing makes to the bottom line is minimal. Both say new long-term electricity contracts, which account for the vast majority of their sales, are what's really driving up profit.
Joe Hopf, president of PPL's electricity trading operation PPL EnergyPlus, said that, when setting long-term electricity contracts, he considers many factors, such as fuel prices and environmental costs, but not marginal price.
"Marginal pricing does not lead to higher energy costs," he said "It is a tried and true method for ensuring that the most efficient and cost-effective power plants are running."
Electricity is not grain
Another consequence of marginal pricing, according to Kleppinger, the industrial customers' lawyer, is that it undercuts what was supposed to be one of the primary benefits of deregulation: choice.
Electricity deregulation unfolded in two stages. First, in 1992, the federal government made possible wholesale competition by mandating that utilities open their transmission grids to outside electricity generators. Then, individual states moved toward retail deregulation.
Retail deregulation promised to end electric utility monopolies: Customers -- from homeowners to factories -- would be able to shop around for electricity, choosing from among a variety of providers.
In Pennsylvania, retail electricity deregulation legislation was signed into law by then-Gov. Tom Ridge in 1996.
Alternatives to traditional utilities, though, have failed to take root in most parts of the state. In the PPL service territory, for example, most consumers have only one source of electricity, the same one they've always had: PPL.
But even in parts of western Pennsylvania, where customers do have some choice, the difference in prices offered by the various electricity providers is negligible, Kleppinger said.
"Is it a meaningful choice?" he said. "The answer would be no."
The underlying issue, Kleppinger explained, is that electricity is different from other commodities: It cannot be stored like, say, grain. And it has no substitute. If the price of corn goes up, you can switch to rice. But there's no realistic alternative to electricity when it comes to lighting your home.
"The economic theory of marginal pricing is difficult to rebut?But it breaks down on this commodity," he said. "The benefits do not flow down to the consumer."
Energy companies, meanwhile, are calling for patience. They blame the price caps that have kept electricity prices frozen near 1997 rates for undermining competition.
"It is impossible for competitive suppliers to beat the price currently being offered by PPL," PPL spokesman McCarthy said. "The expiration of price caps is likely to result in additional marketplace offers from competitive suppliers, giving customers -- especially larger customers -- more options."
The question for Pennsylvania is whether industrial customers such as Allegheny Technologies will be willing to wait and see if that happens.