New Efforts to Address Expiring Rate Caps

Yesterday, Rep. Mike Turzai, along with Rep. Stan Saylor, unveiled a new bill to stabilize electric rates after the expiration of rate caps (Turzai Press Release). HB2300 in conjunction with HB2236 present some good ideas but most of the measures interfere with the competitive electricity market. Meanwhile the House Environmental Resources and Energy Committee reported a bill to extend rate caps out of committee.


New Restrictions:

• Requires utilities to enact three-year rate phase-in plans, allowing customers to – on a voluntary basis – ease into any higher prices that might result when rate caps are removed. (Phase-in plans are a reasonable compromise but they entail further stranded costs push back real competition)

• Require that rates are changed only on a quarterly basis. (A restriction on the market may hinder competition)

• Allows consumers to voluntarily pay in advance for any expected rate increases and receive 6 percent interest on any prepaid amounts.

• Implement guidelines affecting the way utility companies purchase electricity from generators, providing price controls for customers while requiring use of alternative energy sources.
  

Bright Spots:

• Saylor's legislation would reduce the gross receipts tax by 50% over 5 years.
  

• A provision in Turzai’s bill would allow small independent generators to establish micro-grids and sell excess power.
  

The root of Pennsylvania’s problem is the lack of competition in the retail market. The best thing the state can do is create a friendly business environment for generators, utilities, and consumers. This can be accomplished by repealing stringent environmental regulations, reducing taxes and educating consumers about electric competition. Any attempts to “regulate” the transition from rate caps will ensure high electric rates.