Licenses to gouge
Deregulated electricity rates have saved money for many Pennsylvania consumers, who are able to shop for lower rates during an era in which abundant natural gas has helped to drive down generation costs.
According to the state Public Utility Commission, however, consumers are on their own when some rate brokers use variable rate contracts as licenses to gouge.
While shopping for low rates, thousands of Pennsylvania consumers have come across variable rate promotions that offer very low introductory rates, often in the 6 cents-per-kilowatt hour range. In subsequent billing cycles, however, those consumers are confronted with bills two, three or even four times higher than the originals.
The PUC itself has received more than 1,500 complaints from consumers and state Attorney General Kathleen Kane also is investigating.
Meanwhile, a spokesman for the Retail Energy Supply Association claimed that the huge price spikes for variable rate customers have been due to cold weather's impact on wholesale fuel and electricity markets rather than to price gouging by some of its member companies.
But, as reported by David Falchek of The Times-Tribune, wholesale prices have been stable since at least last September, as reflected in the PPL Electric Utilities price to compare of 8.75 cents per kilowatt hour. That price reflects the company's composite costs of acquiring electricity from multiple sources through a variety of different types of contracts, thus providing a good overview of market conditions.
According to the PUC, there isn't much consumers can do as long as the exponential rate increases are included in the original contracts. Even the state consumer advocate has said that the contracts often are couched in legalese that is impenetrable for the average consumer. That makes those contracts licenses to gouge.
The exploitation of consumers through variable rate contracts constitutes a failure by the PUC to protect consumers. The Legislature should authorize PUC regulations to cap rates in variable rate contracts or to bar them.