End of Electric Rate Caps Could Shock Consumers

John Seidenstricker watched in dismay as his electric bill doubled from about $70 to $140 a month when the rate cap on Pike County Light & Power Co. expired at the end of 2005.

“At the time, it was extreme,” said the 64-year-old retired schoolteacher from Milford. Some people in town had trouble paying their bills, and the local diner raised prices to afford the electricity.

Since then, Seidenstricker has contracted with a different electric supplier, a company based in Ohio, and his electric bill is now slightly more than $100 per month.

Unless the legislature acts soon, 85 percent of Pennsylvania’s electric consumers may see whopping increases in their bills over the next two years. Capped rates are scheduled to expire Dec. 31 for customers of PPL Electric Utilities and Dec. 31, 2010, for customers of Metropolitan Edison, Pennsylvania Electric, PECO Energy and Allegheny Power.

The Public Utility Commission predicts rate increases could range from a low of 1 percent to nearly 37 percent, with the average cost of electricity for residential customers jumping about 25 percent.

The potential for that kind of jump worries AARP Pennsylvania. “Our members cannot afford this kind of electric rate increase, particularly in today’s economic environment,” said Ray Landis, advocacy manager. “We would prefer steps be taken to mitigate the increases.”

AARP has informed legislators that expiration of the caps poses an “imminent crisis for a significant portion of our population.” AARP has 1.9 million members in the Commonwealth.

Gov. Ed Rendell, D, has listed dealing with the utility cap issue as one of his highest priorities and called for a phase-in of the rate hikes over three to four years instead of the next two.

State Sen. Lisa M. Boscola, D-Bethlehem, who has been an opponent of utility rate increases, said she hoped the caps would be left in place “until we have a responsible phase-in plan. I’m praying before June, but I’m more worried it’s going to go into the fall.”

J. Michael Love, president and CEO of the Energy Association of Pennsylvania, said the prices of coal, oil and natural gas—fuels used to generate electricity—have fallen significantly since last year, when estimates for the rate increases ranged from 8 percent to 63 percent. He argued that the rate caps, instituted as part of deregulation in 1996, have “shielded people from the real cost of energy.” He said his association will urge the legislature to allow the rate increases to take effect as scheduled.

In the meantime, PPL Electric Utilities, Allegheny Power, Pennsylvania Electric and Metropolitan Edison have gotten approval to set up their own repayment plans, allowing customers to make advance payments to help offset the higher rates they’ll have to pay later, according to the Public Utility Commission (PUC).

Stephen B. Gardner, AARP’s associate state director for communications, predicted that the safety net will be inadequate for those who won’t be able to pay the higher rates. “There will be an increase in the number of folks who will have their utilities shut off because they can’t afford to pay their bills,” he said. “A law three years ago took the PUC out of that equation. It’s in the hands of the utilities now. It’s a bad law.”

Don Sarvey is a freelance writer living in Harrisburg, Pa.