Deregulation blamed for rates increase


allegy thing

Greensburg, PA, U.S.A. — (METERING.COM) — February 23, 2007 – In December 2006 Allegheny Power, a U.S. utility based in Pennsylvania and the electric delivery subsidiary of Allegheny Energy, Inc., filed a proposal with the Maryland Public Service Commission that called for 15 percent rate increases in 2007 and 2008, with the money going into a dedicated fund.

With the expiry of the residential generation rate caps and the move to market-based generation pricing on January 1, 2009, the surcharge would convert to a credit on customers’ bills. Funds collected through the surcharge during 2007 and 2008, plus interest, would be returned to customers as a credit on their electric bills, thereby reducing the effect of purchasing electricity at market prices. The credit would continue, with adjustments, to maintain rate stability until December 31, 2010.

The utility held public forums throughout the state, explaining the proposal and the rationale behind it. After obtaining feedback from customers, the proposal will be modified. The key changes to the original plan are:

  • The opportunity for customers to choose not to participate in the transition plan.
  • The provision of refunds to customers who move outside of Allegheny’s service territory, or the heirs of deceased customers. 
  • An increase in the company’s contribution to the Community Energy Fund over the four years of the plan.

“Our goal is to help customers manage their bills when rate caps expire. We listened to customers throughout the commission’s public hearing process and have modified our plan in response to their concerns,” said T, President of Allegheny Power. “We believe these changes address the key issues: choice, protection from dramatic rate changes and assistance for those who need it the most – our fixed-income and low-income customers.”

Pennsylvania deregulated its electricity industry in the late 1990s, and Allegheny Power reduced its residential rates by 7 per cent; in 2002 the rates were capped until the end of 2008. Since then, however, the cost of producing electricity has risen dramatically, and there have been no other entrants into the market to provide the expected competition. Many people are suggesting that it is deregulation that has resulted in the need to significantly hike electric tariffs.

The utility has asked that its amended proposal be approved by March 31, 2007.