Pennsylvania Gov. Ed Rendell said Tuesday he would have "no choice" but to push for an extension of the electricity rate caps if state lawmakers don't approve legislation to help ease the effect that rate increases would have on consumers.
The Democratic governor said he wants the Legislature to approve plans that would phase in the cost of rate increases, require utilities to offer energy conservation programs and mandate that utilities buy energy in a competitive manner so customers get the lowest reasonable rates.
If those bills aren't passed, Rendell told a House committee, the best option would be to extend the caps "a year or two or three or four."
"If we don't take action, I will have no choice," Rendell told the Environmental Resources and Energy Committee during a hearing at City Hall. "It's not my preferred alternative ... But I think it ought to be absolutely clear to our friends in the utility industry that that's an alternative."
The Legislature would have to approve any extension of the caps.
Pennsylvanians could see home electric bills rise 40, 50 or even 60 percent by the time decade-old rate caps expire in the next few years. A household spending $1,200 a year on electricity could end up seeing that bill rise by $400 or $500 once utilities can bill customers for the true price of the power they buy, Rendell said.
The caps froze electric rates at 1990s levels and were imposed on utilities as part of a deregulation designed to deliver lower bills in a competitive marketplace. Competition, however, has not flourished.
Rendell said the state needs to help residents deal with the expected increases and noted that many utility companies are doing very well financially. He pointed out that PPL earned a record $1.3 billion last year and anticipates a 50 percent earnings increase in 2010, the year its cap expires.
"We don't want to treat our utilities unfairly," he said. But if necessary, the state could find a way to extend rate caps in a way that would withstand any legal challenges, he said.
Some caps in Pennsylvania already have expired. Most residential customers of Pennsylvania Power Co. saw bills increase by 20 percent to 30 percent when the northwestern Pennsylvania utility's rate caps expired last year.
After PPL's rate caps expire in 2010, caps are coming off in the territories of Allegheny Power, Metropolitan Edison, Peco Energy and Pennsylvania Electric in 2011.
PPL spokesman George Lewis said he supported Rendell's push for new energy legislation, but said that extending rate caps is not a solution; he said utilities would then be paying 2010 prices while charging customers 1990 prices.
"Extending the rate caps is really more of a head in the sand approach to what's happening with energy costs," said Lewis, whose company has 1.4 million customers in central and northeastern Pennsylvania. "It's just kind of putting off the problem for another day."
One way or another, Rendell said, the state must help lessen the impact on customers.
"We have the power to keep prices in check if we choose to do so," he said.
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