Pennsylvania: Just the Facts, Please.

Hyperbole and half-truths have clouded the picture of Pennsylvania’s expiring rate caps and ignore the fact that retail electric competition has saved that state’s consumers billions, according to a recent op-ed by Jan Jarrett of PennFuture. Scary stories, she says, are becoming urban legends.

Responding to critics who argue consumers should return to monopoly control of electric markets, Jarrett points out that restructured power markets have paid dividends to much of the state. Beyond the fact that state electric rates are now 5 percent lower than the national average (compared to 15 percent above the national average before competition), renewable wind power generation and energy conservation innovations have boomed in Pennsylvania’s organized market –a direct benefit of competition.

Customers in Duquesne Light’s Western Pennsylvania service territory have seen incredible benefits since rate caps expired in 2004. Since that time, electricity rates have decreased 29 percent below 1991 rates in constant dollars. Fifteen power suppliers now compete in the market, and eighty-nine percent of Duquesne’s total electric load has switched suppliers (including 56 percent of commercial customers and 18 percent of residential customers) to take advantage of retail power competition.

PPL Electric customers, who will be affected by the January 1^st rate cap expiration, are already seeing the same positive trends. About 150,000 of its 1.4 million customers have chosen to buy power from alternative suppliers, including more than 100,000 residential customers. More than a half dozen companies have announced plans to provide electricity at a discount to PPL’s default service rate, and the Pennsylvania Public Utility Commission (PUC) has licensed five of these retail power suppliers to sell power to PPL residential customers.  In fact, these discounts will typically produce savings of at least $100 to $200 in addition to as-yet-undetermined savings achieved by competitive auctions by PPL to serve its default customers, according to PUC Chairman James H. Cawley.

Myopic critics should consider the long-term benefits of competition, instead of focusing on the fact that default power rates are only now catching up with 13 years of inflation and gradual price increases. Market conditions for consumers across. Opportunities for Pennsylvania consumers are increasing now that clear incentives have emerged. New companies are ready to compete for their business by offering a variety of innovative and customer-focused options for their consideration.

We’re glad advocates like PennFuture are fighting to clear the record about competition. Regressing to monopoly control of Pennsylvania’s electric market would eliminate customer choice and remove market-based incentives for innovations like renewable generation and energy efficiency.

Now, isn’t that a scary story to consider?

Joel Malina | January 4, 2010