Electricity restructuring has resulted in real cost cuts for Pennsylvania’s families, says PennFuture

HARRISBURG, Pa., Aug. 28, 2002 — Citizens for Pennsylvania’s Future (PennFuture) praised Keystone Research Center’s (KRC) call for a comprehensive study of utility restructuring and believes that both the Legislature and the Pennsylvania Public Utility Commission (PUC) have vital regulatory responsibilities over the electric industry.

Any objective study would document many benefits for Pennsylvania’s families, employers, and environment that have already resulted from Pennsylvania’s especially successful approach to restructuring as well as identify possible problems and their solutions as the Commonwealth continues its electricity market transition.

Chief among restructuring’s benefits are rate cuts in inflation-adjusted dollars for residential customers of about 20% and industrial employers of 17% since 1996.

“Those rate cuts save many families a highly significant $200 per year that they can now use to buy back-to-school clothes and other necessities,” said PennFuture President John Hanger. “The business rate cuts are being used to create and protect jobs at thousands of companies in Pennsylvania.”

As documented in “Electricity Competition: The Story Behind the Headlines — A 50- State Report,” rate cuts in Pennsylvania exceed the national average by about two to four times for residential and industrial customers and are greater than the average of other states that have also restructured their retail markets (go to www.pennfuture.org and click on Pressroom and Publications for a copy of the report).

As a direct result of restructuring, electric rates in Pittsburgh have been cut to 1981 levels, when a postage stamp cost 20 cents, the minimum wage was $3.35, and college tuition was affordable to the middle class, PennFuture said.

“As important as the consumer and economic benefits are to a better future,” said Hanger, “restructuring in Pennsylvania and in other retail restructured states is also spurring clean energy policies and alternative power supplies like wind farms. …”

The electric industry constitutes 2% of the Gross National Product but causes approximately 70% of the nation’s sulfur dioxide, 30% of its nitrogen oxide, 30% of its carbon dioxide, and 18% of its mercury pollution. These pollutants respectively cause acid rain, smog, global warming, and toxic contamination of water, as well as habitat destruction, according to PennFuture statistics.

The organization said that Pennsylvania should immediately address the failure of the PUC to order each utility to deploy equipment in all businesses and homes that would give consumers the option to save money by reducing their electricity usage during high demand periods.

This metering and appliance control equipment would increase reliability, decrease pollution, decrease the market power of generators, and save even more money for consumers.

PennFuture also agreed with KRC that the PUC should ensure that all utilities are making needed investments and have proper staffing, to continue safe and reliable service in the distribution and transmission systems that remain a fully regulated monopoly function.

As to concerns KRC has regarding investor returns in the electric industry, PennFuture said that KRC’s use of data was highly selective. Investors in both DQE and Allegheny could have made substantial profits, depending on when they bought and sold over the last five years, since for some of the five year period both stocks were way up.

Moreover, despite the recent huge general downturn in share prices, investors in PECO Energy and other electric utilities don’t have any real reason to complain, the organization said.

PennFuture is a statewide public interest membership organization that advances policies to protect and improve the state’s environment and economy. PennFuture’s activities include litigating cases before regulatory bodies and in local, state and federal courts, advocating and advancing legislative action on a state and federal level, public education and assisting citizens in public advocacy.

Source: Citizens for Pennsylvania’s Future

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