Rendell predicts surging power costs

Pennsylvania's residents need to brace themselves in the next few years for a jump in electric bills when the caps on power generation charges are lifted, Gov. Edward Rendell told a group of senior citizens Thursday in Greensburg.

"When those rate caps are eliminated, it will cause a tremendous jump in your (electric) bill," Rendell said during a 45-minute speech before about 60 senior citizens at the McKenna Senior Center.

The caps were lifted on Duquesne Light Co.'s customers. In the case of Allegheny Power's customers in Western Pennsylvania, they will be lifted completely as of January 2011.

They will be ended in five service areas in the state between 2009 and 2011, Rendell said. The rate caps, which were set at 1990s levels when the state deregulated power prices, have not produced savings for customers as anticipated, the governor said.

Rendell produced a chart, based on projections from Pennsylvania Consumer Advocate Irwin "Sonny" Popowsky, predicting that the average bill of an Allegheny Power residential customer who uses 1,000 kilowatt hours per month will jump from about $78 a month in 2010 to $128 a month in 2011.

"In light of all the other rising costs, where are you going to find another $600 (a year)," Rendell said.

The governor said there are estimates that residential electrical rates in the state will jump about $1.5 billion, and commercial and industrial users will pay an additional $2.5 billion.

"We don't feel the electric companies should get that much of an increase quickly," Rendell said. Instead, the governor is proposing caps on the percentage of increases, requirements to buy power at the lowest reasonable rate, plus implementing cost-cutting tools such as a "smart meter" to inform residents to use power at off-peak times when the costs are lower.

While the governor is projecting high rate increases when the caps are lifted, Allegheny Power spokesman David Neurohr said it is too difficult to speculate what will happen 2 1/2 years from now. The company has refrained from making any predictions, but expects rates will rise, in part because of the increase in the price of coal and natural gas, Neurohr said.

Greensburg-based Allegheny Power has helped consumers by agreeing in 2005 to extend caps on its rates until 2010, taking instead a series of smaller rate hikes, Neurohr said.

"We are willing to sit down and talk with the governor. There needs to be serious discussion about this," Neurohr said.