Philadelphians Soon to See Dramatic Rise in Utility Costs

Pennsylvania residents may soon see a bank-breaking increase in electricity prices as rate caps on utilities are due to expire by 2010.  In 1996 the Pennsylvania legislature decided to deregulate the public utilities, however at that time they capped the electricity rates for consumers for several years.  But those rate caps are about to expire spelling trouble for Pennsylvanians. To get a glimpse of our future check out the recent report from Labor Justice Radio 84,000 households slated to be shutoff in Baltimore, which focuses on the dramatic increase in utility costs since electric companies were deregulated.

In PA, the rate cap for Duquesne Light Co. (Pittsburgh area) already expired, resulting in price increases of 20% - 40 %.  In Pike County (Northeast PA), electricity rates jumped an average of 74%. A small business owner in that area saw his summer monthly bill go from $800 to nearly $2000.  This is a harbinger of what' to come to all Pennsylvanians; Duquesne and Pike are small companies compared to the ones whose rate caps are set to expire in 2009 and 2010, affecting far more consumers.  Rate caps will expire in 2009 for PP&L and in 2010 for PECO, Metropolitan Edison, West Penn Power and PennElec. 

The promise of lower costs for consumers by deregulating electricity market has utterly failed to materialize.  The deregulation's proponents promised lower costs through greater competition and investments in innovative renewable resource technologies.  The reality remains that consumers in deregulated states (about 28 states) pay much higher costs for electricity because there is no meaningful competition, and there is no regulation to ensure that the rates charged are just and reasonable.”  Instead, the rates are now set by these utility oligarchs in a wholesale market auction that has little transparency and is susceptible to collusive behavior – in other words, a rigged auction.  Although deregulation was supposed to generate competition, the incumbent utility companies are acting to prevent competition and it turns out that competition cannot be easily created because a power company is the most expensive business to start.  Moreover, the theoretical incentive to build renewable resource power plants does not exist under the current market structure. 

When similar rate caps expired in Maryland in 2007, well-established industrial and commercial businesses had to relocate out-of-state due to the spiking electricity cost increase of more than 70%.  Certainly, no new businesses are coming to Maryland.  In a recession, these rate cap expirations are more than an insult to an injury.  They will significantly worsen the injury.  In Pennsylvania, large employers have cancelled their expansion plans due to the anticipated increase in electricity costs.  Some lawmakers are trying to prevent this disaster of drastic rate increase, but leaders of the House (controlled by the Democrats) and the Senate (controlled by the Republicans) and Governor Rendell are opposed to doing anything meaningful about it.  Governor Rendell appears happy just lining his pockets with lobbyists’ money, now that he no longer has any viable political future in the near future.  And both the Republican and Democratic leaders are happy taking contributions from these large corporations.  The most they will talk about is "rate mitigation," meaning they want you to slowly get used to and eventually accept these high energy costs. 

There is only one way to win this fight.  Tell these leaders that their political existence is over if they go along with these corporations’ interests at the expense of residents and businesses.  That is the only language that they understand.  These leaders are (Senate Republicans) Dominic Pileggi, Robert Mellow, Jane Orie, Michale O’Pake, Michael Waugh, and (House Democrats) Keith McCall, Todd Eachus, Mark Cohen, Dwight Evans.  

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