'Suffering will be significant'

As another company pledges to compete in PPL's market, activists ask the Legislature to delay the expiration of electricity rate caps.

Wednesday, December 02, 2009

BY DANIEL VICTOR dvictor@patriot-news.com

The middle of an ugly economic climate when people are already struggling to pay their bills is the wrong time to jolt PPL customers with a 30 percent bill increase, a group of activists argued at the Capitol on Tuesday.

"The increases will be significant, the suffering will be significant," said Eric Epstein of Rock the Capital. "People will be making choices they shouldn't have to make between food, warmth and medicine."

Epstein and others argued that legislators should quickly act to extend rate caps that have kept prices at 1996 levels.

Unless that happens, PPL customers will face the rate hike on Jan. 1, when rate caps tied to the 1996 electricity deregulation effort expire. Market prices have soared above the rate caps, and PPL will bring its rates in line once the caps are removed.

Met-Ed customers are likely to face a rate increase in 2011.

Rate caps were implemented as a consumer protection while utility companies charged users to recoup "stranded costs" -- the investments they made in infrastructure that they believed would be unprofitable after deregulation.

PPL will stop collecting for these costs on Jan. 1. In its place, the rate caps will be lifted, allowing utilities and private companies to charge higher prices.

Six of 11 utility companies in Pennsylvania have had their rate caps lifted so far. While Epstein and others seek a last-minute extension, others have focused on coping with the changes.

Irwin "Sonny" Popowsky, Pennsylvania's consumer advocate since 1990, said it was contractually acknowledged early on that the rate caps would expire and the utilities would return to market prices. Now the state must abide by that agreement, he said.

"Those rate caps were great, but they've come to an end," he said. "The goal is to come up with ways to mitigate the impact on customers."

When the rate caps are removed, several private companies are poised to offer lower deals on the electricity generation portion of customer bills. MXenergy announced Tuesday it will be the latest company to compete in PPL territory, joining several others who have pledged rates lower than PPL's 10.55 cents per kilowatt hour.

Those savings won't come close to offsetting the jump up to market prices, though.

Asked how long the rate caps should remain in place, Gene Stilp of Taxpayers and Ratepayers said it should be renegotiated. Epstein recommended waiting until the summer, when bills are typically lower.

Stilp said lawmakers have avoided the issue by hiding behind state budget negotiations, but more consumers will be upset once they see their first bills under the new rates.

"Then you will hear a grand outcry, a great outcry from the people," he said.