ROBERT SWIFT: Capitol Matters: Back to the drawing board
HARRISBURG - The uproar over skyrocketing electric bills this winter due to variable rate pricing deals has knocked the wind out of Senate legislation to transform the electric choice market in Pennsylvania. Sen. Robert Mensch, R-24, Lansdale, sponsor of the bill to end what's known as electric default service, said this week he would go back to the drawing board to write a whole new bill and also focus on the variable rate problem.
He and other lawmakers are responding to complaints by consumers who shopped for electric suppliers and have seen their bills triple in recent months due to little-noticed provisions in contracts allowing for rates to vary.
Mr. Mensch's default measure was introduced last fall several months before the spike in electric bills for many customers with variable rate clauses.
His bill proposed allowing retail electric firms to bid to provide service for more than 3 million default customers. These are customers who chose not to shop for an electric supplier and have stayed instead with their traditional utilities such as PPL. The default option has existed since electric deregulation arrived on the scene in Pennsylvania in 1996.
The bill drew attention at the Capitol because it provides a potential way to generate needed state revenue that doesn't involve raising taxes.
The state would receive a $100 acquisition fee for each switched account under the bill. This could mean a potential infusion of more than $300 million at a time when costs for public pensions and medical assistance outrun the anticipated growth in state tax revenue.
The bill generated considerable controversy, most recently at a House Democratic Policy Committee hearing in January where consumer advocates and groups like AARP testified against it and retail energy firms testified on behalf of it.
"It is clear to me that many Pennsylvania consumers are aware of their choices, but have decided to stay with or return to their default service provider, said Sonny Popowsky, a former state consumer advocate speaking on behalf of AARP. "In my opinion, we should respect that decision, particularly where, as in Pennsylvania, the default supplier is procuring power in competitive wholesale markets and then passing on the benefits of those competitive procurements to their customers on a dollar-for-dollar basis."
However, Ronald Cerniglia, a Direct Energy executive, told the committee that the utility default service is not always the lowest price. The average PPL customer would have saved $127 last year by moving off default, he said.
Mr. Mensch said the goal of the default service bill was to help consumers get lower rates, but he acknowledged the controversy surrounding it.
"That legislation immediately came under fire, with critics alleging it would `force' consumers to give up their default provider," he wrote in an op-ed. "The criticism was well placed, and I listened and I will include default service for those who choose, in my new bill."
ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part.