AARP and Consumer Advocates Oppose Tentative PUC Order That Could Force Consumers to Pay Higher and More Volatile Electricity Rates

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Dec 11, 2012, 05:01 ET

New PUC Rules Would Threaten Availability of Default Electricity Service Plans for Consumers

HARRISBURG, Pa., Dec. 11, 2012 /PRNewswire-USNewswire/ -- AARP Pennsylvania yesterday joined with three consumer advocacy groups to oppose a recent order by the state Public Utility Commission that would potentially force customers to choose an electricity provider by making pricing of default electricity service plans more volatile and costly.

In comments filed yesterday with the PUC, AARP Pennsylvania, the Pennsylvania Utility Law Project, Community Legal Services and the Pennsylvania Coalition Against Domestic Violence said the recent order represents an effort by the PUC to drive consumers into open electricity markets by making legally-mandated default service plans less stable and more expensive.

"We think the current law and existing default electricity plans are working," said AARP Pennsylvania Advocacy Manager Ray Landis. "The PUC has not shown that the market is broken or justified changing the Legislature's intent to provide stable and affordable default service."

State law currently requires electric utilities to offer default rate programs to consumers who opt not to choose a specific provider through a "prudent mix" of resources that are designed to provide adequate and reliable service at the least cost to customers over time. The PUC order would require changes to the original legislation.

"This order will effectively destabilize default electrical service plans and force customers into choosing a supplier on the open market, which could expose them to unnecessary price spikes," said Landis.

Currently, more than 60% of households statewide purchase electricity through default rate plans. In a recent telephone survey conducted by AARP Pennsylvania, 75 percent of respondents stated that it was either "extremely important" or "very important" that electric distribution companies continue to provide a standard plan at the lowest reasonable cost. When specifically asked how concerned they were about their costs of electricity increasing, 72 percent of survey respondents were "somewhat" or "extremely" concerned.

The ability to afford and maintain essential electric service remains a continuing challenge for nearly 1.3 million low-income households which can't easily accommodate unnecessary price volatility in their monthly electric bills. As electric competition is promoted in Pennsylvania, state law requires the PUC to ensure protections, policies and services that assist low-income customers afford their bills are maintained, including the Customer Assistance Programs (CAPs) administered by each electric distribution company.

"There has been no showing that low-income households as a whole benefit by individually entering the competitive marketplace," said Harry Geller, executive director of the Pennsylvania Utility Law Project, a statewide project advocating on behalf of low-income utility consumers. "In fact, the evidence from recent proceedings before the PUC indicates the contrary."

Geller added that the tentative order fails to address or provide adequate protections for economically vulnerable households. "In the real world, where prices may go up as well as down, the current default service model, which requires utilities to procure energy at least cost over time, while imperfect, is far more preferable," he said. "A proposal which exposes low-income households to potential short-term market volatility and price spikes is not in the best interest of Pennsylvania's most economically vulnerable."

Officials from the Pennsylvania Coalition Against Domestic Violence also voiced opposition to the PUC's plan to change default electricity service.

"To ease the transition of domestic violence victims to safety, the General Assembly passed legislation protecting victims of domestic violence from electric service disconnection or termination," said PCADV Legal Director, Ellen Kramer. "Unfortunately, the PUC's plans to change default service threatens those legal protections and presents a new obstacle by introducing a fluctuating electricity rate many victims will struggle to meet."

AARP has 1.8 million members in Pennsylvania. AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people 50+ have independence, choice and control in ways that are beneficial to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for Americans 50+ and the world's largest-circulation magazine; AARP Bulletin, the go-to news source for the 50+ audience; AARP VIVA, a bilingual lifestyle multimedia platform addressing the interests and needs of Hispanic Americans; and national television and radio programming including My Generation and Inside E Street. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.

Contact: Steve Gardner, AARP PA
(717) 237-6481 or [email protected]

SOURCE AARP Pennsylvania