Terrance Fitzpatrick, General Counsel of the Electric Power Generation Association, this week highlighted options for helping Pennsylvania customers deal with higher electricity prices being driven by higher fuel and commodity costs.

Fitzpatrick made his comments in testimony he delivered at a House Environmental Resources and Energy Committee held in Pittsburgh, Pa.

Fitzpatrick said, "Electricity prices are rising throughout the country - in both states that allow competition and in states that retained traditional regulation - because of increases in the cost of fuels used to generate electricity, and in the cost of building new power plants." He argued that Pennsylvania legislators can best respond to this challenge by educating customers on how they can conserve and save, giving customers options to phase-in higher prices, encouraging conservation and reductions in peak demand for electricity, and reviewing the adequacy of low income assistance programs.

Fitzpatrick cited a range of studies and media reports that have concluded that higher electric prices in both states that have and haven't restructured their markets have been driven by higher fuel and commodity costs.

"It is a hard reality," Fitzpatrick said, "that Pennsylvania cannot control the global conditions - surging demand for energy and commodities in countries such as China and India - that are driving up the underlying costs of producing electricity."

Fitzpatrick directly challenged claims that competition is to blame for higher electricity prices. "It is simply wrong to blame higher electricity prices on electricity competition, on PJM's wholesale pricing rules, or on generators of electricity," Fitzpatrick said. "Policies that are based on these mistaken beliefs will lead Pennsylvania in the wrong direction, and will cause higher prices and less reliable service down the road."

Instead, Fitzpatrick said, "Pennsylvania can help customers adjust to higher prices by providing phase-in options, helping customers to conserve and reduce their peak demand, and providing assistance to low income customers."

EPGA is a regional trade association of major electric generating companies that supply wholesale power in Pennsylvania and surrounding states. Its member companies own and operate more than 141,000 megawatts of generating capacity, approximately half of which is located in the mid-Atlantic region.

A copy of Fitzpatrick’s testimony is available online.

7/25/2008