Gainey bill to curb utility rate hikes

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After hearing complaints about soaring heating bills over the winter, State Rep. Ed Gainey, D-East Liberty, has introduced legislation that would limit the amount gas, electric and water service delivery companies can charge customers after making improvements to their infrastructure.

Specifically, it would stop the Pennsylvania Public Utilities Commission from issuing waivers to utility companies allowing them to charge more than the 5-percent cap (7.5 percent for water companies) state law sets.

Though this is certainly a potential hidden cost consumers could bear, it is not why he and other state and local politicians and the PUC received constituent calls about high heating bills.

With the winter of 2013-2014 being one of the four coldest in 30 years, it is not surprising that, as they did then, people used more natural gas and electricity to heat their homes. But 30 years ago, people could not shop for the lower rates because the utilities had not been deregulated.

Now, in Allegheny County as elsewhere, customers can choose from a number of natural gas and electricity suppliers. And as those companies do, customers can lock in a long-term rate. However, the more attractive rates are variable, and some of those have an introductory rate that is even lower as a lure to new customers. But, as the state Consumer Advocate Natural Gas Shopping Guide website warns: prices change.

Even with a fixed-rate price, people paid more this winter because they used more. But, as demand increased, so did the variable rates. So in addition to paying for more gas, some people ended up pay more for more gas—in some cases four to five times as much.

The same is true for those with electric heat. Variable rates can—and did—vary a lot.
With the PUC receiving more than 15,000 calls about high electric heating bills this winter, Commissioner Pam Witmer proposed new regulations that would allow consumers to switch suppliers within three days—the process can currently take anywhere from 11 to 40 days.

During hearings held in Allegheny County Council chambers April 10, Witmer asked the state House Consumer Affairs Committee to adopt the regulations as a way to give consumers more control, allowing them to change to a fixed-price contract, or another supplier, if a spike in rates occurs.

Terry Fitzpatrick, president and CEO of Energy Association of Pennsylvania, representing the utilities said the inability to quickly close out accounts would make expedited switching difficult, adding that by the time consumers got their bills, switching providers would not help much.

Acting Consumer Advocate Tanya McCloskey said the electricity rate hikes (from $.06/kwh to $.20 or even $.44) reported to her office were unprecedented in her 27 years of experience and not the customer’s fault.

“These were not consumers who voluntarily and knowingly selected a product, took a gamble on the market, and just made the wrong bet,” she testified. “There was simply no way for consumers to know from the disclosure statement provided by suppliers…that they were fully exposing themselves to such extraordinary bill increases.”

McCloskey again proposed reporting requirements and switching options, which she noted the committee did not include in its last rulemaking recommendations.

For more information on shopping for electricity, natural gas, visit the state Consumer Advocate website at http://www.oca.state.pa.us.

(Send comments to cmorrow@newpittsburghcourier.com.)

 

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