Electricty rate caps and rate increases debated before a state House panel

by Jen Rehill
Public Radio Capitol News, serving Pennsylvania

Harrisburg, Penna. (PRCN, September 5, 2007) – Consumer advocates say electricity bills in Pennsylvania could skyrocket when rate caps expire in 2010, but industry representatives say free market competition will keep prices in check. Whether the legislature should act on the issue was the focus of a state House Consumer Affairs Committee hearing.

Electricity rates increased by seventy-two percent when price caps expired in Maryland last year. The public backlash included a call to disband the state’s public utility commission.

Pennsylvania Consumer Advocate Sonny Popowsky says he’s concerned the electric restructuring law written in the 90’s didn’t anticipate that the majority of customers would face rising and volatile market prices when caps expired here.

“I’m suggesting we make some basic changes, some simple changes in the law specifically to require our utilities rather than simply default to the prevailing market price at the end of the rate cap period to acquire a least cost portfolio of resources. That’s what we do in the natural gas industry.”

But Electric Power Generation Association President Doug Biden says allowing free competition between suppliers in the wholesale market is the best way to keep prices down.

“Open competitive procurement continues to place the financial risks associated with generation on the investor, rather than on electric utility customers preserving a significant customer benefit of electric restructuring.”

The complex debate is likely to escalate later this month, when the General Assembly begins its special session on energy.