Debate over winter electric costs still simmers

PUC could discuss the issue later this month.

Winter storm

Winter storm (DONNA FISHER / THE MORNING CALL / February 14, 2014)

The weather finally is heating up, but the controversy over electricity costs associated with last winter's polar vortex still hasn't cooled down.

One of the boiling issues is a controversial plan by one of the state's largest competitive electric suppliers to place an additional charge on customers who had signed fixed-rate contracts so they wouldn't face unexpected costs.

FirstEnergy Solutions, which sells power locally and has about 400,000 customers statewide, notified customers in March about the one-time charge.

That set off some people, including the Public Utility Commission chairman, who said there was a "stench" associated with charging a fee to fixed-rate customers, which include him.

The company has retreated partially, announcing two weeks ago it no longer intends to charge residential customers.

Business customers still will be charged. That's prompted business groups, including some that represent Lehigh Valley companies, to challenge the charge with the PUC.

The company proposed the charge, $5-15 for residential customers and varying rates for businesses based on their power use, to cover unexpected costs it was charged by the regional power grid, PJM Interconnection.

The grid's costs rose during January's polar vortex when temperatures plummeted and power use surged as people cranked up the heat. PJM passed those costs on to power suppliers like FirstEnergy Solutions.

Spokeswoman Diane Francis told me the company did not change its mind about charging residential customers because of public backlash. She said few complaints were received. I haven't heard any myself.

Rather, Francis said, FirstEnergy Solutions wanted to keep its customers satisfied and didn't want to do anything to deter people from continuing to shop for electricity on the deregulated market. She said it considered that many individuals were new to shopping for power and weren't familiar with contracts and evaluating risks.

She said businesses are more familiar with that process and have been doing it longer, and will be charged in July or August.

The one-time charge will be less than $25 for about 60 percent of business customers; less than $100 for about 80 percent of customers; and less than $500 for about 95 percent of customers, Francis said. Large industrial customers that use a lot of power will pay the most.

"The majority of our business customers are going to have a fairly minor charge," she said.

It's still caused a big stink, as not everyone believes the fixed-rate contracts allow the charge.

Those terms permit FirstEnergy Solutions to pass on to customers any new ancillary and regulatory charges that are imposed. In a challenge filed with the PUC last month, the Utility Workers Union of America argued the proposed charge doesn't fall within that definition.

The PJM charge wasn't new or imposed and wouldn't have been incurred by FirstEnergy Solutions if it had adequate power reserves of its own and wasn't reliant on PJM's emergency supply, the union argued in a petition filed with the PUC.

"FirstEnergy Solutions had the ability to avoid this fee," said Scott Rubin, the Bloomsburg lawyer who filed the challenge on behalf of union members who faced the fee as residential customers.

That challenge appears to be moot with the fee rescinded for residential customers, but that doesn't mean the case is dead.

Business groups such as the PP&L Industrial Customer Alliance, which includes Air Products and Chemicals, Hercules Cement and Wegmans Food Markets, and the Met-Ed Industrial Users Group, which includes Dixie Consumer Products, East Penn Manufacturing and Exide Technologies, have filed papers seeking to participate in the union's proceeding.

Their Harrisburg attorney, Pam Polacek, told me the groups' participation doesn't mean the members are FirstEnergy Solutions customers. But she said the trade groups have an interest in the matter.

Their petition, which says most members buy power from competitive suppliers, repeats the union's argument against the charge. The state Office of Small Business Advocate filed papers last week asking to participate in the case, too, on behalf of the businesses it represents.

FirstEnergy Solutions has not responded to the petitions. It is waiting for the matter to be considered by the PUC on May 22, Francis said.

State officials still also are debating other issues related to the high electricity costs that occurred during the polar vortex.

As power use rose, thousands of people buying electricity at variable rates from competitive suppliers were caught off guard when their rates jumped without warning. Some rates doubled, tripled or quadrupled in just a month, breaking budgets with bills that were hundreds of dollars more than customers anticipated.

Last month, the PUC tightened regulations by requiring suppliers to disclose more information to customers, such as advance notice of some variable rate changes and whether there are limits on how much variable rates could change.

The agency also reduced the time it takes to switch suppliers to three days from the previous 11-to-40 days, so customers don't have to suffer a high rate for another billing cycle.

Those changes are pending approval from the Independent Regulatory Review Commission and state legislature, which is considering even stronger changes. Some lawmakers want to cap how much variable rates could change, or prohibit variable rates altogether. But while some have talked tough, so far our legislative leaders haven't shown the political willpower to enact any of those changes.

As my colleague Sam Kennedy reports on page News 16 today, the most promising bill so far, proposed by Rep. Robert Godshall, has stalled.

The Watchdog is published Thursdays and Sundays. Contact me at watchdog@mcall.com, 610-841-2364 or The Morning Call, 101 N. Sixth St., Allentown, PA, 18101. I'm on Twitter @mcwatchdog and Facebook at Morning Call Watchdog.

Featured Stories

Advertisement

PLAN AHEAD

Top Trending Videos