Auditor General Jack Wagner Says PUC Should Enhance the Educational Programs for Consumers About the Impact of Electricity Deregulation

HARRISBURG, Pa., July 22 /PRNewswire-USNewswire/ -- Auditor General Jack Wagner said today that, with 60 percent of Pennsylvanians due to have their electricity rates uncapped at the end of this year, the Public Utility Commission, state government and electric utilities should do more to educate consumers about electricity rate increases resulting from the rate-cap expiration.

"Every Pennsylvania household faces the potential for a rate change as a result of the removal of electricity caps later this year," Wagner said. "State government, with the PUC in a leadership role and the utilities, must help customers prepare for this historic change by providing consumers a proactive education program that explains what will occur and what their options are."

Wagner said that the PUC has made some efforts to educate consumers between the expiration of the first rate cap, on Jan. 1, 2000, and after six companies' rate caps expired in April 2007, but more can be done. His finding was contained in a special performance audit released today. It is available to the public at www.auditorgen.state.pa.us.

The PUC said it was not concerned about consumer education during that period because only 15 percent of Pennsylvania ratepayers were affected. By the end of this year, electricity rate caps will have expired for all ratepayers in the commonwealth, meaning that electricity suppliers will be permitted to charge consumers higher rates.

For service areas covered by the six electric distribution companies where rate caps have already expired, rates have increased over 30 percent on average, with customers of Pike County Light and Power seeing rates jump 73 percent, Wagner said.

Effective on Jan. 1, 1997, the Electricity Generation Customer Choice and Competition Act was enacted to move Pennsylvania to retail electric competition. Under the act, all electric distribution companies were required to divide their electric services into distribution, transmission, and generation services, with distribution and transmission being regulated and generation unregulated.

Electric companies were required to provide open access to the electric rate markets. In order to ease transition to the competitive markets, the act provided that electricity rates would be capped for various periods of time at levels that existed as of Jan. 1, 1997.

When the rate caps expired, electricity would be provided at prevailing market rates for generation.

In addition to educating consumers, Wagner recommended that the PUC assess and monitor the financial impact of electric deregulation on Pennsylvania to determine what additional assistance can be provided to consumers in order to minimize future electricity price increases.

"With Pennsylvanians already hit hard by the worst economic downturn since the Great Depression, the last thing we should do is saddle them with significantly higher electric bills," Wagner said. "Everything possible must be done to soften the impact of rate increases through education and choice of electric supplier."

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly.  He is the Commonwealth's elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations.  The Department of the Auditor General conducts more than 5,000 audits per year.  To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department's website at www.auditorgen.state.pa.us.

SOURCE Pennsylvania Department of the Auditor General

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