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Utilities argue against rate-cap extension bill in Pennsylvania
Washington (Platts)--12Feb2008
Investor-owned utilities in Pennsylvania are urging state lawmakers to
oppose legislation that would extend electricity rate caps that are set to
expire in 2010 for most utilities in the state, the head of one IOU group said
Tuesday.
After beating back similar rate-cap extension legislation in the fall in
Pennsylvania's special legislative session, the utilities have made defeat of
House Bill 54, introduced by Representative Camille Bud George, a Democrat
from Clearfield County, their top priority this year, said Michael Love,
president and CEO of the Energy Association of Pennsylvania, which represents
IOUs in the state.
George is chairman of the House Environmental Resources and Energy
Committee, which is holding a hearing on his bill Tuesday, Love noted. The
bill would extend capped rates for utilties to 2013.
Duquesne's rate caps expired in 2004, most others are due to
terminate at the end of 2010. PPL's will expire at the end of 2009. When those
expirations occur, some legislators fear a repeat of the 2006 experience in
Maryland, when rate caps expired and caused rate hikes of up to 72% for some
customers.
Although some lawmakers support extending utility rate caps that have
been in place since the state restructured its retail market, "we're confident
we'll be able to forestall extending rate caps," Love said.
Extending rate caps would only delay dealing with the realities of
today's power market and force utilities to buy power at prices much higher
than the prices at which they are allowed to resell it to their customers,
Love said. In a statement to be filed with the Genaral Assembly, Love said
Pennsylvania should learn from the restructuring experience in California,
where capped utility rates led to the bankruptcy of one utility and
near-bankruptcy of two others.
Among those expected to testify at Tuesday's hearing are Carl Wood, a
former commissioner with the California Public Utilities Commission,
Pennsylvania Consumer Advocate Sonny Popowsky and a representative from
Duquesne.
--Tom Tiernan, tom_tiernan@platts.com