Governor Rendell and Legislators Fail to Protect Ratepayers; Opportunity to Implement Real Solutions to Pending Electricity Rate Increases Missed, Says Citizen Power

PITTSBURGH, Oct. 8 /PRNewswire/ -- Today the Pennsylvania legislature enacted House Bill 2200, legislation that Governor Rendell and legislative leaders promoted as the key tool to mitigate electricity rate increases that are projected to occur when rate caps end in two years. According to regional energy advocacy organization Citizen Power, the legislation does contain some good provisions, including measures to reduce utility customer usage through conservation and energy-efficiency measures, and making the use of "smart meters" voluntary, rather than forcing customers to pay for the installation of this controversial technology. However, the legislation does not provide the protections against rate increases that the Governor and its drafters claim, said David Hughes, executive director of Citizen Power.

Citizen Power has two major concerns about HB 2200: one, enactment of this legislation may preclude the kind of solutions that must be implemented if significant rate increases are to be avoided; and two, under the provisions of the bill, utilities now have a roadmap for increasing rates, albeit with oversight by a Public Utility Commission (PUC) that is very utility friendly.

"The usage reductions required in the legislation will not offset the projected rate increases. More important, under deregulation, the supply procurement methods HB 2200 requires will not lead to true "least cost" power purchases," according to Hughes.

Based on current projections by the PUC and the Consumer Advocate, the average monthly residential electric bill, for electric heat customers could increase as follows: Utility Current Monthly Bill Projected Monthly Bill PECO (20% increase) $193.96 $232.75 PPL (35% increase) $127.55 $172.19 West Penn (63% increase) $152.13 $247.97 Met. Edison (50% increase) $174.02 $261.03 Penn. Elec. (50% increase) $181.38 $272.07

These are conservative estimates. Yet, despite the valiant efforts of some legislators, in particular, Senator Lisa Boscola and Representative Camille "Bud" George, the General Assembly will finish this session without addressing these projected increases.

"The Governor and the General Assembly are ignoring the real problem, which is the failure of electricity deregulation, and thus are failing to offer solutions that will address these projected rate increases," Hughes continued. Citizen Power asserts that rate increases are not justified. Pennsylvania has a 50% excess generating capacity, and utilities are making record profits. "If anything, rates should be coming down," Hughes said.

Utilities argue that rate increases are necessary due to increased costs, specifically increases in fuel costs. Citizen Power argues that prices are really set by an arbitrary pricing mechanism established by the PJM Interconnection, the huge Regional Transmission Organization that runs the wholesale electricity market in the entire region.

Under regulation, retail electricity prices are approved by the PUC after an extensive investigation. In that scenario, consumers would be protected from an unfair PJM wholesale pricing mechanism. "This is an example of a structural problem that the governor and the legislature are ignoring, yet they claim they are protecting ratepayers. It would be funny if we weren't facing serious economic consequences due to their inaction," Hughes said.

Until the legislature revisits the "Electricity Generation Competition and Customer Choice Act," Pennsylvania electricity consumers are left unprotected. Citizen Power has called for a study of why electricity deregulation isn't working, and even that simple request is being ignored. "Here we are, 10 years into this huge mistake and there isn't one person in an elected leadership position in this State talking about real solutions. The Governor and the legislature must bite the bullet and deal with the fundamental structural problems caused by deregulation. Anything short of that will lead to unfair ratepayer gouging in two short years," Hughes concluded.

Citizen Power urges the members of the Pennsylvania Senate and House of Representatives to commit to addressing the failed Customer Choice program in early 2009.