A plan to allow PPL Electric Utilities customers to pay in advance for an increase in electric prices when a cap is lifted in 2010 will be delayed after the Public Utility Commission (PUC) postponed a vote on the plan. While PPL Electric Utilities calls the delay disappointing, State Senator Lisa Boscola said the delay is a victory for consumers.

May 1, the PUC postponed a decision on PPL Electric Utilities plan to give residential and small business customers the option of making advance payments in 2008 and 2009 that would be used to offset a portion of their bills in 2010 and 2011. PPL Electric Utilities would pay six percent interest on the money paid for the future bills and customers could drop out of the program and receive a full refund including interest.

The plan was proposed because a price cap set in 1996 when deregulation was enacted in PA, is set to expire in 2010 for PPL Electric Utilities. The company, which is a subsidiary of PPL Corporation, does not own any power generation plants and must purchase electricity from other companies. The company serves 1.4 million customers in Pennsylvania.

PPL Electric Utilities said electric generation costs have been increasing nationwide due to a variety of factors including higher costs for fuel, materials and equipment; changing environmental regulations; and a shrinking difference between electricity use and available supply. The company added that its customers have been shielded from those increases by the rate caps.

“Customers should have options for managing higher energy costs,” said David G. DeCampli, president of PPL Electric Utilities. “We remain hopeful that the PUC will approve the plan in time, but are extremely disappointed with the delay, which keeps us from offering this option as a way to help our customers.”

The plan was to start July 1 but will be delayed at least until August 1 due to the PUC’s postponement on approval of the plan.

“We believe 60 days is the minimum time needed to have an effective customer education and enrollment period,” DeCampli said. “We have informed the PUC that the earliest we could begin the phase-in option is now August 1. The longer the program is delayed, the less effective it would be in smoothing out higher costs over time.”

Sen. Boscola said the plan was simply a way to increase rates before the rate cap ended in 2010. “Fuel costs are a fraction of the billing equation,” she said. “Electric companies in regulated states pay the same price for fuel, whether it’s coal, natural gas or nuclear. Yet, the lights are still on for half the price reflected in customers’ bills. Nearly 20 other states enacted electric deregulation. Electric rates increased anywhere from 60 percent to 85 percent in our neighboring states when caps came off. It’s an economic train wreck that has nothing to do with fuel costs. It’s all about greed.”

“If PPL really wants to help its customers, it should lower their electric bills,” Boscola said. “This company is making record profits. Profits that are 50 percent higher than last year. But, they supposedly need a 50 percent rate increase in 2010 or they’ll go bankrupt? Give me a break.”

“Higher costs following a lengthy period of price controls will not be easy for our customers,” DeCampli said. “The phase-in option is just one of the measures we have offered as a way to help customers.”

He noted that all parties to the proceeding — including the PUC’s trial staff, the Office of Consumer Advocate, the Office of Small Business Advocate and organizations that represent customer groups — have agreed to the plan, and a PUC administrative law judge ruled that the phase-in option is in the public interest and should be approved.

PPL Electric Utilities is also working to obtaining electricity for 2010 in advance and in stages to minimize the risk it will be purchases a period with unusually high prices. The company is also installing advanced metering technology to help customers use electricity more wisely.

The company will also increase funding for assistance programs for low-income customers. The programs help pay electric bills, weatherize homes and reduce the balances on customers’ bills.

The company will also expand a program which allows volunteer customers to shift electricity use to reduce their bills.

“We will continue to work with the PUC and with the Legislature on an energy policy for Pennsylvania that gives customers as many options as possible - including the opportunity to choose other companies to provide their electricity supply — for managing their electricity costs,” DeCampli said.