The wave of price caps on electric utility rates that swept seven distribution companies early this year is about to hit the remaining four.
Citizens Electric, Duquesne Light, Pennsylvania Power Co., Pike County Light & Power, UGI Utilities, Wellsboro Electric, and PPL Electric Utilities, Inc., representing nearly 40 percent of the residential power customers in the Commonwealth, had the caps set in 1997 lifted.
As of Jan. 1, 2011, the caps for Metropolitan-Edison Co., Pennsylvania Electric Co., PECO Energy Co., and West Penn Power Co., will also have the now nearly 14-year-old caps removed.
Those firms represent more than 85 percent of Pennsylvania electric customers.
The 1997 Electricity Generation Choice and Competition Act was created to cap electric rates at 1996 levels to ease the transition of the industry overall into competitive markets.
The law was also meant to give the distribution firms time to make up for “stranded costs,” meaning investment made in plants and other infrastructure in the anti-monopoly environment the companies were finding themselves in.
With nearly 25 percent of the electric customers in the group of distributors that shook off the rate caps early this year, PPL is the elephant in the living room when it comes to feeling the impact.
In the “good old days,” PPL was the only pony in the show. But the craze for deregulation led to the incursion of a number of companies who were allowed to generate their own electricity and put it out over the utility’s lines, for a fee.
It didn’t work all that well. The cost of fuels used to general the juice skyrocketed, and, with the rates capped, many of the independent generators packed up and left the state.
The number of alternate generation firms available varies from one distribution company to another. PPL, the largest distribution company, has 18 suppliers vying for customers. Some of the distribution firms have no options for their customers to choose from.
PPL spokesman Jim Nulton said half a million residential customers – out of 1.4 million in PPL’s service territory, have made the choice. Customers had the option of seeking electricity from 18 different suppliers who offered varieties of rates and packages. But the power still flowed over PPL’s distribution network.
“They are still our distribution customers,” Nulton said. “The portion that they’re getting to negotiate on is the suppliers. We’re like UPS, which delivers items that you order online, but has nothing to do with making whatever it us you ordered. That’s how it works.”
He said PPL’s generation division is still there and making electricity, but he said PPL is in the position of being the supplier of last resort.
“We’re very much telling our customers to get out and shop…We’ll always be the safety net. We’ll still supply them, but they really should shop around, because they may get a better deal,” he said.
Consumer advocates, having long since given up on keeping the caps in place, are hoping that the higher rates will goad consumers into looking for the smarter deals and finally getting serious about using less energy.
In a recent announcement, Metropolitan Edison estimated that after the caps are lifted, their customers’ costs could increase by 2 to 3 percent.
For more information:
# Contact the PUC by calling 1-800-692-7380, or
# visit PAPowerSwitch.com, or
# check the Office of Consumer Affairs’ or call directly at 1-800-684-6560.
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