Enhancing Competition In Pennsylvania

Michael Giberson

Pennsylvania Governor Edward G. Rendell came out in favor of enhancing competition in retail electric power supply in the Pittsburgh area (in this press release):

“Enhancing competition in Pennsylvania means working to expand the choices that consumers have by creating more energy options and increasing the supply of energy from a diversity of resources,” Governor Rendell said. “Instead, the PUC decision limits competition, giving consumers fewer options and less control over the electricity they receive and, ultimately, they prices they will pay.”

The Pennsylvania Public Utility Commission (PUC) decision mentioned was a September 30 vote confirming the state commission’s earlier rejection of a six-year rate cap proposal by Duquesne Light Co. that came with promises by the company to increase the amount of renewable energy it would purchase.

But Rendell’s statement is a bit confusing.

Consider a pair of stories that ran in the Pittsburgh Post-Gazette, one just before last Thursday’s decision and the other just after. The Wednesday story casts the PUC as wanting to accelerate deregulation, but facing opposition from “Duquesne Light Co., Gov. Ed Rendell and big business.” The PUC was described as “hoping to spur more competition among electric suppliers” by dropping “restrictions that would have made it more costly for customers to switch suppliers.” On Friday, the newspaper said:

The state Public Utility Commission, standing up to intense pressure from Duquesne Light, Gov. Ed Rendell and big business, yesterday reaffirmed a three-year rate plan for the Downtown utility that is designed to give Western Pennsylvanians more power-buying choices.

So who wants more competition in Pennsylvania, the Governor or the PUC?

The PUC approved a three-year rate cap instead of a six-year rate cap, but this rate applies only for small customers. Large customers get just one more year of fixed price service from the utility, and then they face hourly rates. Compared to the plan the Governor favors, the PUC’s approach appears to peel back the security blanket of regulated rates somewhat faster and will push more consumers to choose a competitive power supplier. The Governor’s favored approach would have resulted in more consumers buying the utility’s designated amount of renewable energy, the PUC’s approach will result in more consumers deciding themselves whether they want to buy renewable power.

The Governor is confused.