Monday, May 12, 2008

Pennsylvania Electric Bills -- 60 percent Increase



Household finances tight? Then sit down.

Pennsylvanians could be staring at increases in their home electric bills of 40, 50 or even 60 percent by the time decade-old rate caps expire in the next couple years.

Those are estimates from the state's utility consumer advocate, Sonny Popowsky, who was asked by Gov. Ed Rendell to project what the bigger bills could look like for more than 4 million residential customers.

This is what Popowsky came up with:

-Allegheny Power: 63 percent increase

-Metropolitan Edison: 54 percent increase

-Peco Energy: 8 percent increase

-Pennsylvania Electric: 50 percent increase

-PPL: 37 percent increase

Popowsky's estimates are particularly striking because some of the utilities, notably Allegheny Power, Pennsylvania Electric and Metropolitan Edison, have avoided predicting what kind of increase their customers should expect.

Asked if he thought anything can be done to avoid the increases, Popowsky said, "No."

"I think it's inevitable that we'll see rate increases," he said. "The question is, how big will they be?"

The caps, which froze electric rates at 1990s levels, were imposed on utilities as part of a deregulation designed to deliver lower bills in a competitive marketplace. Once those caps expire, utilities can bill customers for the true price of the power they buy.

Some utility officials caution that the expiration of their rate caps is far enough away - Jan. 1, 2010 for PPL; Jan. 1, 2011 for the other utilities - that no one knows what the price of electricity will be then. A few utility rate caps, such as Pittsburgh's Duquesne Light, have already expired. Allegheny Power is scheduled to phase in the total increase over the next three years.

Once the caps expire and the utilities can pass along the full wholesale price, the size of the increase will be in inverse proportion to current utility bills. For instance, Peco's increase is expected to be smaller because its bills are already relatively high.

Legislation addressing rate caps and electricity costs has bounced around the General Assembly for at least the past year. Power companies, business groups, electricity marketers, utilities, environmentalists and others have lobbied on the bills, creating a crossfire of competing interests that often slows legislative action to a grinding pace, if not a halt.

Popowsky wants utilities to be required to seek out the lowest-cost electricity on the wholesale market, which would mean giving them a freer hand to buy electricity in contracts than they have under current law.

Some legislators want to keep electric rates as they are now, increasing only with the rate of inflation. Others say utilities must be allowed to charge full wholesale prices, but the big increases should be phased in over several years.

Under one bill that the House passed in February, the state would hire a company to manage conservation and efficiency programs and meet goals for electricity savings in each utility territory across the state.

There are also competing plans in the Legislature to distribute hundreds of millions of dollars in incentives to encourage alternative and cleaner energy production, as well as efficiency and conservation projects.

Most of the money in both would go to energy businesses, while a smaller slice would help people pay for new furnaces, solar panels or other home projects that can cut electric bills.

That kind of help is sorely needed, some residents say.

Salvatore Trentacoste, a resident of the Pocono Mountains town of Reeders, said he spent $8,700 last year to buy a more efficient home heating system, including a propane furnace.

He got a meager $350 tax credit back from the federal government.

"If the government wants people to conserve energy, they've got to do more than they're doing, because nobody's going to be bothered," Trentacoste said.

The changes helped: He spent about $1060 on electric bills from October through April, compared to $2000 the previous winter.

But that doesn't include the $1.85 per gallon he spent to fill up the propane tank - a cost that rose to an average of $2.60 per gallon in March, according to federal statistics.

At the very least, people should keep energy efficiency in mind when they go shopping for a new appliance, Popowsky said.

"Those are the kinds of things that people need to think about more, unfortunately," he said.