Shocking, isn't it?
Electricity rate price-gouging of thousands of Pennsylvanians during the unusually cold winter has produced a surge of consumer-protection bills in the state Legislature. Most, however, do not embrace the simplest and surest course to protect consumers from predatory pricing.
Lawmakers deregulated the electricity market more than a decade ago. Since then, the abundance of natural gas resulting from the Marcellus Shale drilling boom has driven down prices.
But many consumers received nasty shocks when they opened their power bills mid-winter - exponential increases ranging to 300 percent over the teaser rates that they had agreed to months earlier, when leaves were on the trees. The Review recently reported about a local resident who saw his rate climb from from 7.1 cents to 20.1 cents per kilowatt hour. His bill went from around $130 to $140 a month to $314 a month.
The industry blamed the massive increase on volatile spot-market prices resulting from long cold spells.
Lawmakers since have proposed rate caps, specific notification of impending rate spikes and some other measures meant to take the surprise out of variable-rate escalation.
The better course would be to prohibit variable-rate pricing.
Some legislators say that variable rates work for some customers, especially business customers, even though many businesses were badly burned by the recent rate spikes.
Many businesses have the wherewithal to negotiate prices and, at the least, to fully understand the contracts they enter for their power supplies. Most residential customers lack bargaining power and legal expertise.
Legislators should ban variable contracts for residential contracts, maintain default rates for consumers who do not want to switch and shorten the periods for which consumers must maintain their contracts with suppliers.
The recent price-gouging requires major reform rather than tinkering.