PA Governor Afraid Steel Industry Not Smart Enough

Michael Giberson

At a press conference yesterday, Pennsylvania Governor Edward G. Rendell indicated he thought that western Pennsylvania-based steel companies were not smart enough to manage their own electric bills, and needed the assistance of Harrisburg-based political appointees and state government employees. Representatives from the steel industry and the local utility appeared at the press conference to indicate support for the Governor’s position.

At issue is the PUC’s recent issuance of a “Provider of Last Resort” order that requires Duquesne Light after May 2006 to price the sale of electricity to industrial customers on an hourly basis. The PUC also failed to adopt a proposal by both Duquesne Light and the Office of Consumer Advocate that a portion of the generating mix over the next six years include a growing percentage of cleaner advanced and renewable energy sources. (From the Governor’s press release)

Amazing. Even with 20 months of lead time, the Governor feels that industrial customers in the Duquesne area will not be able to figure out how to manage energy input costs. The utility had asked for a six-year rate plan that increased about 7 percent over current rates for the first three years, and then another 5 percent for the second three years. The Pennsylvania PUC granted the requested increase for the first three years only.

Apparently, according to the Governor, the PUC granting of a three-year rate increase instead of six will “jeopardize thousands of jobs that support Pennsylvania families,” force the utility “to seek an additional $20 million rate increase for residential consumers,” which naturally “will fall more heavily on the poor and hard-working families.” In addition, the decision “introduces a high degree of uncertainty for large power users, especially manufacturers,” “puts our industrial sector at risk,” and “makes Pennsylvania’s economy vulnerable to electric commodity speculators who would aim to manipulate the system in the pursuit of quick profits.” The Governor also cites “cheap foreign competition” and “what happened in California” as of concern. (All quotes from the press release.)

News reports from the Pittsburgh Post-Gazette, the Pittsburgh Tribune Review, and Associated Press provide additional details.

The Pittsburgh Post-Gazette story concludes with this bit of hopeful news: “Because Duquesne Light has made the most progress of any state utility in adapting to the deregulated environment, the PUC’s decision is expected to set precedents that will apply when other utilities are forced to live in a more market-based world.”