Addressing Pennsylvania’s electric rate spikes
03/12/2014 01:35PM ● Published by ACL
By Senator Bob Mensch
More than a decade ago, the Pennsylvania legislature deregulated the state’s energy industry with the goal of providing consumers with additional choices in selecting what company supplies their electricity. The goal was to drive down prices for consumers through competition.
Unfortunately, that has not been the case for most consumers. Nearly two-thirds of Pennsylvania electricity customers have yet to enter the competitive market. Many who entered the market – particularly those who entered into fixed rate contracts – have had a positive experience and saw their electric rates and bills decrease. But, as recent news stories have indicated, a significant number of consumers have been adversely affected with electricity providers charging variable rates as opposed to fixed rates.
Given the harsh winter, consumers with variable rate contracts saw their rates and bills spike dramatically. Some fluctuation in rates is to be expected – just as variable rates for heating oil or home mortgages increase or decrease depending on the market. However, reports of rate spikes of two to three times the amount they were paying raise serious concerns and the Attorney General, as well as the PUC are correct to look at these cases for potential wrongdoing.
These incidences underscore the need for us to have stronger consumer protections here in Pennsylvania accompanied by a more robust education campaign on behalf of the Public Utility Commission and the electric suppliers. New legislation I will be introducing very shortly will do just that, including provisions that will:
• maintain the current default electric structure as a choice for consumers with no change in supplier,
• ensure rate stability for all term contracts, including into the 13th month (and beyond) after the expiration of a 12 month contract;
• manage and set limits on upside rate spikes impacting consumers with variable rate contracts, making them more predictable for the consumer;.
• charge the Public Utility Commission and the industry with providing much more consumer education – an area that has been clearly lacking;
• provide additional protections for commercial and industrial customers, large and small.
• Improve the timeframe for contract conversions, so consumers choosing to switch are able to immediately lock in on the rate they choose.
Last year, I introduced legislation that would help to move consumers into lower, competitively priced generation contracts that would save consumers money. I did so because I was frustrated by witnessing so many people -- including many seniors on fixed incomes -- paying rates that were in some cases 20 percent higher than what they could get on the competitive market. That legislation immediately came under fire, with critics alleging it would “force” consumers to give up their default provider.
The criticism was well placed, and I listened and I will include default electric for those who choose, in my new bill. Very few bills are perfect upon introduction -- that it why legislative committees hold hearings, collect witness testimony, and amend legislation. However, rather than try to fix S.B. 1121, I intend to start from scratch, with completely new legislation that contains much stronger consumer protections.
The fact is, Pennsylvania consumers are paying more than they should for electric service to the collective tune of $357 million last year. In the end, I hope that this legislation will provide lower prices through increased competition, improve understanding of the electric market and the consumer choices, enhance oversight by the PUC, protect consumers from inordinate variable rate spikes, and put in place a stronger set of consumer protections.
Senator Bob Mensch represents the 24th Senate District of Pennsylvania, which includes portions of Berks, Bucks, and Montgomery, Counties.