The House Consumer Affairs Committee held a hearing this week on electricity procurement, rate caps and electric price mitigating strategies.

Public Utility Commission Chairman Wendell Holland said the PUC has no jurisdiction over setting wholesale prices for electricity in Pennsylvania’s competitive electricity market, but said the PUC is taking aggressive action to reduce demand and working to develop a program designed to reduce the potential shock of a transition when the rate caps expire.

Sonny Popowsky, Consumer Advocate of Pennsylvania, said the future of electricity prices and the procurement of electric generation resources when rate caps expire is the most critical issue facing electric consumers today. He recommended the General Assembly adopted changes in House Bill 1201 and House Bill 697 to help mitigate the impacts of electricity price increases.

William Lloyd, Small Business Advocate, said the conventional wisdom is that consumers will face major increases in electricity rates when the rate caps expire at the end of 2010, but the actual impact will depend on the underlying price of electricity at that time. No one can predict with confidence what the price will be at that time, he said.

Douglas Biden, President of the Electric Power Generation Association, said several major factors will influence electricity prices in the future: fuel prices, the cost of complying with environmental regulation and public policies like implementation of the Alternative energy Portfolio Standard, demand response and regulatory uncertainty.

J. Michael Love, President & CEO of the Energy Association of PA which represents the electric distribution companies, said his industry is committed to using conservation and energy efficiency to help offset the rising cost of electricity.

Stephen Feld, Associate General Cousel of FirstEnergy, said he believes competitive markets will provide customers with the most favorable prices over the long-term and recommended multiple, competitive procurement policies to reduce the rate of electricity cost increases.

Lisa Crutchfield, Senior Vice President for Regulatory and External Affairs for the PECO Energy Company, said her company believes Pennsylvanians want assistance in conserving power and want to use renewable power as part of the generation mix.

Doug Krall, Manager of Regulatory Strategy for PPL Electric Utilities, said he believes consumers will have more choices in electric suppliers once the rate caps come off and his company has installed automated meter reading on 1.4 million customers service to help customers better understand the cost of electricity.

Frank Lacey, of the Retail Energy Supply Association, said his group supports the goals of Gov. Rendell’s Energy Indendence Strategy, in particular, conservation efforts, renewable energy and the incentives for renewable energy sources.

John Hanger, President & CEO of PennFuture, said time was growing short to adopt polcies that would moderate the inevitable and necessary increases in electric rates that are scheduled to occur now through 2010.

David Turner, Senior Vice President for Geslalt, provided an overview of smart meter technology.

In addition to these comments, Duquesne Light provided written comments to the Committee.

Rep. Joe Preston (D-Allegheny) serves as Chair of the House Consumer Affairs Committee and Rep. Robert Godshall (R-Montgomery) serves as the Republican Chair.

For more information, visit the PUC’s Electric Price Mitigation webpage.

Links: House Committee Hears Comments on Changes to Electric Competition

PUC Chair Tells Committee “Conserve, Conserve, Conserve” Electricity

9/7/2007