“The study by the American Public Power Association shows consumers suffered a double-whammy last year from the recession and deregulation,” said George, D-74 of Clearfield County. “Despite the economic downturn and lower wholesale costs for electricity, ratepayers faced higher prices while deregulated utilities showed consistent and even higher profits.

“The report is an indictment of the regional wholesale distributor of power, PJM Interconnections, and those who consider oversight of the utilities to be “silly.’” said George, whose House Bill 1909 would create a public power agency to purchase cheaper electricity on behalf of Pennsylvania’s citizens and businesses and spur development of new generation in the state.

APPA, the national service organization for more than 2,000 community- and state-owned, not-for-profit electric utilities serving 45 million customers, said the study “at a minimum demonstrates that the question of whether the [Regional Transmission Organizations] RTO-operated markets are providing benefits to consumers in terms of just and reasonable rates has not been answered.”

“A reasonable person would think the state Public Utility Commission would make answering this question a priority and prompt the Legislature to consider fixing the 14-year-old deregulation debacle,” Rep. George said. “Instead, we’re force-fed the ruse that consumers are saving money by shopping and paying more for electricity.”

According to the APPA report: 

 Earnings by companies, including Pennsylvania utilities, “indicate that their revenues from the sale of electricity greatly exceed their costs of producing electricity”;

  The continued profitability of these companies is a direct indicator of insufficient competition and higher costs for consumers;

 Most of the primary owners of unregulated generation in PJM reported returns on equity about even with 2008 and significantly above regulated returns;

 Three of the subsidiaries owning unregulated generation increased their profits between 2009 and 2008;

  Gross margins from the sale of electricity increased in 2009 for three of the four companies reporting this measure;

 Shareholder gains for the companies in the study greatly exceeded returns from investments in the S&P 500 by almost $40 billion over the last 10 years.

The report notes that PPL’s supply segment earnings from continuing operations increased from $303 million to $333 million. Net income from competitive energy services for First Energy – which includes Met-Ed and Penelec — increased from $472 to $517 million between 2008 and 2009.

“An often-made claim is that under deregulation, these profits are justified because it is the companies who bear the risks of excess costs, while consumers are freed from such risks,” the APPA report said. “But the persistence of these high earnings and stockholder prices raises the question of whether companies are in fact bearing such risk.”

In a news release, APPA President and CEO Mark Crisson said the study strongly suggests once again that wholesale electricity markets “are producing undue profits for merchant generators at the expense of electricity consumers.”

“If these RTO-run wholesale electricity markets were truly competitive, during a time when demand and energy prices are falling, generator profits shouldn’t be increasing,” Crisson said. “Yet publicly available data identified in this new analysis shows that most generators continue to enjoy increased profits above what one would expect in a competitive market.”

by Gant Team – GantDaily

The report, “2009 Financial Performance of Owners of Unregulated Generation:

High Profits Earned in Restructured Wholesale Electricity Markets During the Recession,” is available online.

Technorati Tags: American Public Power Association, electricity deregulation, Pennsylvania, Public Utility Commission

January 05, 2010, 12:01PM

DANIEL VICTOR, The Patriot-NewsActivist Gene Stilp holds a fake indictment list of Pennsylvania lawmakers who he says failed to protect Pennsylvania electricity customers from rising electricity costs.

 When PPL customers see their January bills, the reality of rate cap removal will hit home for the midstate and the anger could start a political firestorm, activists argued in the Capitol in Harrisburg today.

Activist Gene Stilp said he believes the response should rival the anger the public felt after pay raises in 2005 and the current table games debate. He said the public will then demand answers from their legislators.

“People are going to say: ‘What have you done?’ ” Stilp said. “They’ll say, ‘We’ve done nothing,’ and people will remember that.”

Electricity bills are rising 29.7 percent for PPL customers as rate caps expired on Jan. 1. The rate caps were a condition of the deregulation of the electricity industry in 1996.

Activist Herb Braden challenged Public Utilities Chairman James H. Cawley to debate the merits of deregulation — but revealed the challenge to reporters before informing Cawley himself.

In a statement, Cawley declined the offer.

“We appreciate the interest in the expiration of rate caps,” he said. “It would be unproductive to debate the pros and cons of legislative policy that was decided a decade ago. Rather, the PUC is focused on implementing the policy in a way that provides consumers with as many options as possible while protecting the reliability of the system.”

The average PPL customer can limit the increase by more than $100 in 2010 by switching to an alternative energy supplier. A shopping list is available at the Office of the Consumer Advocate Web site.

By DANIEL VICTOR, The Patriot-News

Technorati Tags: electricity deregulation, Pennsylvania

HARRISBURG – Pennsylvania should remain committed to fostering competition among electric suppliers and not reverse course by reimposing electric rate caps, two members of the state Public Utility Commission told an electric industry trade group Wednesday.

The remarks by PUC Chairman James Cawley and Commissioner Robert Powelson came three weeks before the lifting of rate caps for PPL customers in northeastern and central Pennsylvania on Jan. 1.

The commissioners took stock of how development for electric competition is faring in PPL’s service territory in a public discussion with members of the retail-oriented Retail Energy Supply Association.

PPL plans to increase residential electric rates nearly 30 percent once the rate caps end. At least four companies have announced plans to compete for residential customers throughout PPL’s territory, and several more are expected to join them soon. PPL is encouraging customers to shop for electric suppliers while it focuses primarily on the electric generation business and maintains the transmission and utility lines for all electric users in its territory.

State utility regulators have spent the past several years preparing for a smooth transition to a competitive market as rate caps end in Pennsylvania and avoid a situation where customers have no choice but to pay significantly more for their electricity, Cawley said.

“This is a very simple and sensible thing for (customers) to do,” he added. “Make the alternative choice rather than paying default prices.”

The PUC is working with new retailers on issues ranging from providing access to lists of PPL customers to approval of marketing plans.

Once the PPL rate caps are lifted and rate caps for PECO, Allegheny Energy and First Energy are lifted Jan. 1, an era of electric deregulation in Pennsylvania that started more than a decade ago will end.

Rate caps were lifted several years ago for utilities serving about 15 percent of the state’s electric customers in western Pennsylvania.

Powelson said one challenge is combating fears such as the misconception PPL will delay fixing power outages if customers no longer buy electricity from them.

“I think the stakes are too high with this 85 percent of the customer base for us to fail on competitive markets,” he added.

The PUC sought $5 million for a marketing campaign to tout competition in the 2009-10 state budget, but the funding wasn’t provided. In its absence, retailers are holding town meetings and visiting malls to reach customers.

By robert swift (Harrisburg Bureau Chief)

rswift@timesshamrock.com

Technorati Tags: electricity deregulation, Pennsylvania