2008-10-02 / Features

Will Your Utility Help You Pay The Electric Bill?

By Marc Levy ASSOCIATED PRESS WRITER

HARRISBURG, Pa. (AP) - You may not have to pay your entire electricity bill, at least for a while.

With the bills of millions of customers poised to skyrocket to reflect radically higher fuel prices, state lawmakers may require Pennsylvania's electric utilities to eat part of the cost of providing power when deregulation-era rate caps expire.

It is a major issue with three days left on the Legislature's voting calendar this fall, as lawmakers scramble to piece together a plan to blunt the effect of the initial spike.

"Utilities have stockholders that they're answerable to, and we have ratepayers that we're answerable to, and naturally there's a balancing act to this,'' said House Majority Whip Keith McCall, D-Carbon.

If rate caps are allowed to expire untouched, businesses and factories could be forced to close and families could face tough decisions over how to pay all their bills, lawmakers and Rendell administration officials say.

About 85 percent of the state still pays for electricity that is capped at 1990s rates, although utilities have billed them $14 billion for the cost of power plants during that period.

The impact of the increases - anticipated to be between 20 and 63 percent, depending on the utility territory - could easily mean hundreds of dollars annually in higher expenses for each household and small business.

The main discussion in the Legislature revolves around a plan to phase out rate caps over a period of a few years - allowing bills to increase annually by a set percentage until utilities are eventually billing customers for the true wholesale market price of the power they use.

But that would prevent utilities from immediately collecting the full cost of the electricity they buy from power plants. And top legislators are undecided on whether utilities should be forced to swallow that loss, or be allowed to bill ratepayers for it - interest included - once the phase-in period is completed.

The utilities still under rate caps - Allegheny Power Co., Metropolitan Edison Co., Peco Energy Co., Pennsylvania Electric Co. and PPL Corp. - are divided over whether they should pony up some money in the deal, legislators and utility officials say.

Utility officials compare electricity to a fuel, and contend that vendors are not required to subsidize gas, heating oil, natural gas, propane, coal or kerosene - so why electricity?

"We do think there's a reasonable middle ground and we're trying to reach that,'' said Senate Majority Leader Dominic Pileggi, RDelaware.

The time to find middle ground is winding down: The last days that the House and Senate are scheduled to be in Harrisburg are Oct. 6- 8. The election is Nov. 4, and the legislative term expires Nov. 30.

The matter could be left until next year - but utilities want to know the rules as soon as possible and Gov. Ed Rendell, who sounded the alarm over expiring rate caps in early 2007, would view any further delay as irresponsible, said his legislative secretary, Steve Crawford.

On Jan. 1, 2010, bills will rise an estimated 37 percent when rate caps expire for more than 1 million residential customers of PPL Corp., the state's second-largest electric utility.

A year later, rate caps will expire for another 3 million-plus customers of Allegheny Power, Metropolitan Edison, Peco Energy and Pennsylvania Electric.

All those utilities are owned by a parent company that also owns power plants. In theory, the utilities could simply get the electricity at a discount rate from their sister power plants and still return a profit to the parent, some legislators say. Utility officials counter that such an arrangement runs against the interests of shareholders.

"Why would any business sell its product for less than it could achieve elsewhere?'' said J. Michael Love, the president and CEO of the Energy Association of Pennsylvania, an industry group for the state's electric and gas utilities.

But getting utilities to help foot the bill is not without precedent, and lawmakers know it: Utilities in Illinois and Maryland gave back a combined $3 billion to consumers after rate caps there expired and shocked legislators into action.

"Nobody wants to blink at this point, but we're getting to the point where we have to get something done,'' McCall said, "and the clock is running out.''

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