Budget Hearings: PUC Chair Opposed To Phasing In Electric Rate Increases After Caps Expire

Public Utility Commission Chair James Cawley told the House Appropriations Committee this week he was opposed to requiring electric distribution companies to phase in electric rate increases after the caps expire in most areas of the state in 2010-11.

 

Chairman Cawley's testimony is available online.

 

Gov. Rendell, who appointed Cawley, said in his budget address he favors a phase in if electric rates were projected to be 25 percent or more. Acting Department of Environmental Protection Secretary John Hanger repeated that position to both the House and Senate Appropriations Committees this week.

 

Chairman Cawley said extending the existing rate caps, which have been in place since 1997 would be illegal, according to a recent U.S. Supreme Court case involving a utility company in North Carolina.

In addition, Cawley said consumers need appropriate price signals to encourage energy conservation. He said there is no incentive to save energy if unless there is a competitive market for electricity.

 

Chairman Cawley noted the PUC has already approved phase-in plans for several electric companies requiring them to stagger purchases of electricity over time so there will hopefully not be a significant spike in rates.

 

A study released by the PUC in January shows the price for electricity has dropped significantly over the last year due to lower natural gas and coal prices. If there was a competitive market for electricity now, rate increases would vary from only a 1 percent increase in the PECO service area to 37 percent in the Met Ed territory.

 

Chairman Cawley said one key to making a competitive market work is educating consumers on the fact they do have a choice and there might be a supplier with a lower price available.