Local business owners and residents will need to dig deeper into their pockets when rate caps on the cost of electricity expire at the end of 2010.
At this point, no one knows how much the rates will increase, but they are expected to be substantial.
"For Penelec customers, we anticipate residential rates will increase about 48 percent, commercial customers about 58 percent and industrial customers, 71 percent," Public Utility Commission Chairman James Cawley said Wednesday.
(Mirror photo by Gary M. Baranec)
Dan Cowan (right) of LaFace & McGovern explains lighting options to Regis Sherry of NPC Inc., Claysburg, during an energy workshop Wednesday at The Casino at Lakemont. Listening to the conversation is Bob Shostek, a lighting/energy specialist with the Hite Co. More than 100 people attended the workshop, sponsored by the Blair County Chamber of Commerce, ABCD Corp. and the Blair County Energy Committee.
Cawley was among several speakers at an energy workshop sponsored by the Blair County Chamber of Commerce and Altoona-Blair County Development Corporation Wednesday at The Casino at Lakemont Park.
Rate caps on the price of electricity have been in effect throughout the state since late 1996, when deregulation of electricity generation was approved.
The rate caps - enforced by the PUC - provide price protection for consumers. The utility companies were protected as well by standard investment fees that consumers paid with their monthly bills.
However, the caps for 85 percent of Pennsylvania electric customers, including Penelec's, will expire Dec. 31, 2010.
Pennsylvanians have been saving $7 billion to $10 billion while the rate caps have been in place, Cawley said.
Penelec has not increased its base rate since 1986 but has faced increasing costs as the demand for electricity has increased 50 percent since the 1970s and 20 percent during the last 10 years, said Marty Grzasko, Penelec director of customer support.
"What has affected us the most is the cost of fuel. It has gone up about 178 percent since 1986. We have seen a cost increase across the board," Grzasko said.
Cawley and Grzasko told more than 100 workshop attendees that there are several steps to soften the blow of the anticipated rate increase.
The PUC and Gov. Ed Rendell are encouraging utilities to phase in the rate increases after the caps expire. Rendell also has said he would like to see the caps extended a little longer.
Another option are pre-payment plans offered by companies such as PPL and Penelec.
Penelec and Metropolitan Edison, both part of FirstEnergy Corp., are offering customers a plan under which they can pre-pay a portion of their future electric bills and earn 7.5 percent interest, which would be used to reduce their electric bills in 2011 and 2012.
That plan is expected to be approved by the PUC, said Cawley, who is a PPL customer.
"I just signed up for PPL's plan," which offers 6 percent interest in prepaid money," Cawley said. "I am not getting 6 percent on any of my investments."
The best choice for consumers is to conserve energy and use it more efficiently.
"You can use your energy more efficiently by using things like LED lights. You can do an energy audit of your business. Install a more efficient lighting system," Cawley said. "You can shift your usage to another time of day and achieve savings. If all of us chip in and lower the demand that lowers the wholesale price for everyone.
"If we don't do that and keep using electricity like we have, we will need to build more plants and more transmission lines and continue to pollute the air."