The Herald, Sharon, Pa.

Business

March 25, 2008

Electric bills are about to go up – again

By Michael Roknick

MERCER COUNTY — Gasoline, oil, natural gas and coal prices have surged over the past year.

Nothing new there.

But try this on — local electric rates are all but certain to see a bump in prices.

Pennsylvania Power Co. is due to announce its new rates on April 3. The rates, which would become effective June 1, will reflect what the utility has to pay for the cost of buying electricity in the wholesale market.

“Wholesale electricity prices have risen 15 percent over the past 18 months,’’ said Lee McCracken, president of Premier Power Solutions in Grove City, an electric broker and energy consulting company. “All indications are we should expect to see another increase in Penn Power rates. I see nothing that tells me rates are going down.’’

Penn Power wouldn’t predict what the rates will be when the utility unveils them next week.

“Given that coal, natural gas, oil — whatever it may be — has continued to rise, it would be safe to assume the price of electricity will rise as well,’’ said Scott Surgeoner, a Penn Power spokesman.

Unlike last time though when Penn Power locked in household rates for 18 months, this time rates will be set for three years out to May 31, 2011, Surgeoner said.

“What we’re doing is to ensure the best, most competitive price in the market for our Penn Power customers,’’ he said.

Penn Power’s territory covers all of Mercer and Lawrence counties and sections of Allegheny, Beaver, Butler and Crawford counties.

As part of Pennsylvania’s ongoing program to deregulate electric utilities, Penn Power entered the world of electric competition in January 2007. Prior to that Penn Power’s rates had been capped for 10 years under a regulated industry.

When the caps came off homeowners saw their rates rise 33 percent for those not heating with electricity and 20 percent for those who do. Businesses found their rates vary widely with a few actually seeing a decrease and others soaring 50 percent and up.

McCracken’s company brokered a number of electric deals for businesses in Penn Power’s territory whereby they locked companies into three-year contracts. The goal of deregulation was to stimulate competition among electric producers.

With the consumer market being less profitable to electric suppliers it’s taking longer for competition to heat up in that sector. Dominion Corp. moved into the market last spring and McCracken said he expects at lease one other supplier enter Penn Power’s service territory in the upcoming months.

More competition will mean a chance of consumers getting a better deal. Still, given that almost all energy prices have climbed it’s clear local electric prices will rise despite deregulation, McCracken said.

“There are no free lunches,’’ he said.

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