Deregulation continues to be a bad deal for Pennsylvania

September 1, 2011
The George Report

When a planned phase-out of our regulated electricity market became law in the mid-1990s, I warned that the effects of deregulating electricity generators would do far more harm than good across the Commonwealth. Fast forward to 2011, when the last of the rate caps on electricity have all expired, and it's become clear that the short end of the stick we've been handed has never been shorter.

Deregulation advocates tout it as a godsend, claiming that ratepayers are given the best options for cheap electricity because they can shop around for the greatest deal. But when electric utilities are raising rates every few months, we're left choosing between bad and worse.

Some electricity rates have dropped over the last several months. In fact, Penelec's rates dropped from 7.68 cents per kilowatt hour on March 1 to 6.99 cents per kilowatt hour on June 1. But this drop and others across the Commonwealth are a temporary symptom of a poor economy. When the economy recovers and electricity usage goes up, expect higher rates.

Ironically, it was just announced that Penelec's rates are going back up. Effective Sept. 1, the rates jump to 7.62 cents a kilowatt hour. If you've been tracking the price trends, prices have risen more than they've fallen.

While rate increases are enough reason to cringe at the electric bill each month, imagine if you were penalized for reducing electricity consumption to save money. It just happened to 8,500 customers of Dominion Energy Solutions.

Recently, Dominion customers received notice that they were once again customers of PPL, their default electricity provider. These customers were not using enough electricity to be profitable for Dominion, so the unregulated company gave 'em the boot.

Dominion tried to play the move as a goodwill gesture, suggesting that to save its beloved and electricity-conserving customers from higher rates, it returned them to PPL for a lower rate than what Dominion could afford to charge.

But what if there was no default service provider? What if these "unprofitable" customers had to search far and wide for a company to accept them, possibly at higher rates to make up the lost profit margin?

I shudder at the thought, but it might be happening.

There have been rumblings at the Pennsylvania Public Utility Commission to eliminate default service altogether, forcing every customer in the state to shop for electricity. This only hurts our citizens, especially seniors on fixed incomes and the vast majority of people who have not spent countless hours learning our complex electricity market.

Not only that, but as exemplified with the Dominion case, what if you don't use enough electricity? Should responsible folks be charged higher rates for doing the right thing?

Default service is still around in Pennsylvania, at least in the near-term. If you're unhappy with your current electricity rate, you also have the option to shop elsewhere. Visit to see what's available.

Deregulation was a bad idea in other states, and it's no better here. But we should at least keep default service so that our customers who do the right thing and conserve electricity aren't punished simply because they don't use enough electricity to be profitable.

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