Pennsylvania Breaking News

Source: PUC Press Release

PECO to Shift Some Pa. Power Customers to Dominion

(October 3) On Oct. 2, Dominion Resources Inc. said it will provide power generation service to about 250,000 residential customers in PECO Energy's Philadelphia-area service territory.

Dominion will notify by mail customers randomly selected for the program, with the generation service beginning Dec. 1, Dominion said in a statement.

Customers will receive a discount on the generation portion of their electricity bill. PECO will continue to deliver the electricity, Dominion said.

In Pennsylvania, under power deregulation rules, the state encourages utilities to transfer customers to other energy suppliers in an effort to boost competition.

Competition is expected to lower prices over time.

PECO delivers power in the Philadelphia area, and is a subsidiary of Chicago-based Exelon Corp.

Source: Reuters

PUC Creates Inter-Agency Coordination Working Group on Natural Gas Prices

(October 2)  Acting on testimony heard during a special public hearing on natural gas prices, the Pennsylvania Public Utility Commission (PUC) on today voted unanimously to create an inter-agency coordination working group related to the natural gas industry. The PUC also is working with the Council for Utility Choice to implement a short-term consumer-education campaign to raise awareness about rising gas prices and programs to help gas customers pay their bills.

"There were several common themes expressed at the hearing, including the need for customers to explore budget billing which would provide more predictable and affordable bills throughout the year," said PUC Commissioner Kim Pizzingrilli. "A second area of focus related to conservation, weatherization and customer assistance programs, including those programs for low-income Pennsylvanians. "

Additionally, several state agencies have shared responsibilities and opportunities to provide information to assist consumers. The need for coordination among the state agencies was stressed at the hearing as well as by the Commission’s Consumer Advisory Council coordinating efforts with the Commission and other Commonwealth agencies in areas of shared or similar responsibilities is good practice for the Commonwealth and its citizens."

To identify those agencies in which the Commission could improve or, in some instances, initiate communications and enhance the fulfillment of our collective duties, the Commission directed its staff to formulate an internal working group with representatives from all appropriate bureaus to draft a report for the Commission’s review and consideration that outlines a proposal for achieving enhanced inter-agency coordination on matters related to the natural gas industry.

Since the Commission’s hearing, the PUC has worked with both its Consumer Advisory Council and the Council for Utility Choice to develop ways to raise the awareness of all Pennsylvanians about rising gas prices and programs to help consumers manage higher bills this winter.

The Commission will continue to work with the Council for Utility Choice to develop ways to raise the awareness of all Pennsylvanians about rising gas prices and programs to help consumers manage their higher bills. For example, the Council – made up of the Commission, the state Consumer Advocate, and representatives of utility industries, and low-income, rural and minority Pennsylvanians – proposed a campaign to provide information to consumers via radio, media relations, and advertising in African-American and Latino media.

Sources: PUC Press Release

Electric Competition Dwindles in Pennsylvania

(September 8)  Just a few years ago, electricity suppliers were jumping into the Pennsylvania market. But today, bargain-hunting residential customers in southwestern Pennsylvania have few choices. Most suppliers apparently can't beat the price offered by the dominant regional utilities -- Duquesne Light Co., Allegheny Power and Penn Power -- and have folded their tents and left.

The exception is Dominion Peoples Plus, which last month was selling electricity at 5.67 cents per kilowatt-hour to customers in the Duquesne Light service area who wanted to sign up with the alternative supplier. Duquesne Light's rate was 5.83 cents per kilowatt-hour.

Other remaining suppliers such as Community Energy and Green Mountain Energy Co. target consumers focused less on price and more on the environment. These users want to buy so-called "green power," electricity generated by wind and the sun as opposed to that produced by coal-fired power plants that pollute the air.

Today, about 232,000 of the state's 4.9 million residential customers choose an alternative supplier, according to the Pennsylvania Office of Consumer Advocate. That's down from about 460,000 residential customers in October 2000, when alternative supplying neared its peak.

As of July 1, about 136,000 of Duquesne Light's residential customers, or 26 percent, bought power from an alternative supplier. This compares with 175,000 residential customers, or 33 percent, as of Oct. 1, 2000, according to the state Office of Consumer Advocate.

Allegheny Power's customers have never been much attracted to choice, since the utility's rates have historically been among the lowest in the state. In October 2000, about 0.5 percent of Allegheny Power's customers had switched; even fewer today.

Soaring wholesale electricity prices in 2000-01 made it impossible for many competitors -- marketers who would buy energy on the open market and resell it to local consumers -- to beat the rates the utilities were charging. Many ended up leaving the state.

It didn't help that some alternative suppliers also discovered that the unit costs of servicing hundreds of small residential accounts, when spread over the amount of electricity sold, were more expensive than they thought, noted state Consumer Advocate Sonny Popowsky.

Squeezed between high wholesale electricity costs and the high cost of servicing residential accounts, many companies found there wasn't much room to make a profit and remain competitive with the utilities, Popowsky said.

John Quain, former head of the Public Utility Commission, said he doesn't expect an increase in the number of alternative suppliers until the rate caps come off. And in some cases, this won't happen for several years -- not until the particular utility finishes charging its customers for stranded costs.

Source: Pittsburgh Post-Gazette

Utility Will Seek Rate Increase when Rate Caps Expire

(August 14) On August 12, Duquesne Light Co. announced that it plans to ask state regulators in October to approve higher electric rates, once the current rate caps expire at the end of 2004 and it will divulge its plans for providing electricity to customers who don't choose an alternative supplier.

The utility wouldn't divulge the magnitude of the rate increases it would seek, which would be in effect through 2010, and would not say if it planned to stick with its existing energy supplier, Houston-based Reliant Energy. Duquesne Light no longer generates its own electricity.

About a quarter of Duquesne Light's 590,000 residential, commercial and industrial customers have chosen an alternative supplier since electric deregulation was adopted by the state in the late 1990s. The utility's obligation to serve as the "provider of last resort" to customers who didn't switch expires at the end of next year, as do the fixed rates it charges customers who continue to buy power through the utility.

Without divulging many details, Morgan O'Brien, chief executive officer of Duquesne Light parent DQE Inc., told analysts that the utility would ask the state Public Utility Commission to approve its contract with a supplier to provide power to its residential and small commercial customers for a fixed price through 2010. It's still reviewing bids from potential suppliers.

It also will ask the PUC to approve the selection of supplier to provide power to its larger industrial and commercial users for a 17-month trial period, beginning in 2005, during which the customers could choose to purchase electricity at fixed or variable prices. If they choose the later, the companies would in effect be buying power on the spot market, which is subject to the ups and downs of supply and demand. If the pilot program works, it would be extended until the end of 2010.

Source: Pittsburgh Post-Gazette

Electric Deregulation Leads to Big Tax Savings for Utilities

(July 17) While homeowners are paying an average of 30 percent more property taxes than they did in 1997, Exelon, Pennsylvania Power & Light, and the other major electric utility companies in the state are paying 85 percent less in taxes on their plants, down from about $120 million annually to about $20 million, a Philadelphia Inquirer analysis has found. Meantime, the utilities are passing on their real estate levies to their customers, based not on what the companies are currently taxed, but on the far higher sums of six years ago. And it is perfectly legal.

Whether it is fair, however, is a point of contention for thousands of communities and school districts across Pennsylvania that have seen much-counted-on tax revenues from the utilities shrink, in some cases to almost nothing. The City of Philadelphia, for instance, is losing $20 million a year and its fiscally stressed schools nearly $6 million.

"It is an outrage," said Eric Epstein, a consumer-energy activist based in Harrisburg. "The state and the electric companies created a tax-depletion system for the school districts at the worst possible time."

That system was born in the complex deregulation deals the generators cut with the Pennsylvania General Assembly and the Public Utility Commission in the mid-1990s, when they gave up their monopolies and allowed competitors to sell power on what had been their exclusive turfs. The change, the Ridge administration said, would "generate savings and choice for people." It also opened a side door to big tax savings for the utilities.

For the previous 25 years, the power companies' property taxes were relatively cut-and-dried. Payments were calculated by the state and put into one important pot: the Pennsylvania Utility Realty Tax Act fund, or PURTA. For 1997, $167.5 million was paid in, the bulk of it by the two electric behemoths, Peco Energy Co. and Pennsylvania Power & Light. Harrisburg distributed the money annually to every county, town and school district according to their overall tax revenues.

When the state loosened its grip on the electric industry, the commercial power plants -- 25 major ones, 55 much smaller -- were gradually released from PURTA. For the first two years, 1998 and 1999, the utilities were allowed to appraise their plants for tax purposes; the fund tumbled to $60 million.

On Jan. 1, 2000, the plants were removed from PURTA and put on the property rolls of the locales in which they sat, to be assessed and taxed like any hometown business.  On the local tax rolls, the companies have the same right as any property owner: they can appeal their assessments. And they have done so aggressively, arguing that when they gave up their monopolies, their plants plummeted in value. They also contend that most of their equipment should be exempt.

Contesting the assessments, the utilities said, is part of their duty to customers and shareholders to contain costs. Appeals have been filed on virtually all plants in Pennsylvania. While their cases are pending, the utilities typically make interim tax payments that are considerably lower than what they would pay under current assessments. It is an option not available to homeowners.

Source: York Daily Record