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Smart Talk is a daily, live, interactive program featuring conversations with newsmakers and experts in a variety of fields and exploring a wide range of issues and ideas, including the economy, politics, health care, education, culture, and the environment.  Smart Talk airs live every week day at 9 a.m. on WITF’s 89.5 and 93.3.

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Host: Scott LaMar

Smart Talk: PA electric customers still have questions

Written by Scott LaMar, Smart Talk Host/Executive Producer | Jun 29, 2014 1:54 PM

What to look for on Smart Talk Monday, June 30, 2014:

electric outlet 300 x 170.jpg

It's been more than three years since limits or caps were removed from Pennsylvania electric rates.  The price of electricity increased once the rates were unfrozen.

At the same time -- as part of deregulation, electric customers were encouraged to shop for an electric supplier that could offer lower costs per kilowatt hour than their default electric utility.

There was much confusion at first but many customers did switch suppliers.  There may not have been as many as expected but still hundreds of thousands did shop.

Years later, many Pennsylvanians still get their electricity from the default utility and aren't familiar with how or why to shop for a supplier.

Thousands who did choose a variable rate plan with another supplier switched back to their default utility last winter after cold temperatures, increased demand, and higher wholesale prices resulted in electric bills that doubled, tripled or in some cases went up by 600%.

On Monday's Smart Talk, Pennsylvania Public Utility Commissioner Pamela Witmer and Pennsylvania's Acting Consumer Advocate Tanya McCloskey join us to answer questions about electric choice, variable rates, and rate adjustments by utilities overall.

Thumbnail image for pamela witmer and Tanya mcCloskey.jpg

Pennsylvania Public Utility Commissioner Pamela Witmer and Pennsylvania's Acting Consumer Advocate Tanya McCloskey

For More Information:

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Public Utility Commission

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  • Radio Smart Talk img 2014-06-30 08:19

    Thomas from Manheim Twp. writes:
    i do not understand, after almost 130 years of electric service why or who came up with this crazy idea of electric choice? why didn't they just leave the utility do its job. i have a fixed rate, but this remined me of the enron issue in california in the early 2000's when electric rates contiuned to spike. where is the consumer saving. every time i hear deregulation its just that take away regulation. and why have rates remained high with all the natural gas saround?

  • Radio Smart Talk img 2014-06-30 08:28

    Listener emails:

    During low demand,did these VER people receive low electric bills.
    VERs are a gamble,just like people with variable rate mortgages,and when those went up they wanted help.
    I'm sorry,I don't feel bad for them.

    • PA OCA img 2014-07-03 10:25

      Listener- We agree that not making a choice is still a choice. For a variety of reasons, many consumers choose not switch to an alternate supplier and therefore, we are supportive of default service. Recently, legislation was introduced in the General Assembly to eliminate default service but that legislation has been withdrawn from consideration and to date, no new bills have been introduced.

  • Radio Smart Talk img 2014-06-30 08:42

    Steve emails:

    I’m a little offended over somebody implying that “we’re not smart enough” to ask the right questions. My rate jumped over the winter as did my parent’s. I’ve never signed up for a variable rate in my life, however my fixed rate was only guaranteed for a period of time. My beef was that I don’t recall being notified that the end of that period I had signed up for the fixed rate was ending, and I believe this was a common occurrence.

  • Radio Smart Talk img 2014-06-30 08:46

    David writes:

    Hello! I am a frequent listener and supporter of WITF, and unfortunately I won't be able to listen to this program until tonight.

    However, I DO have a comment I believe is relevant to the conversation.

    MOST utilities in PA, and I KNOW that PPL change their rates every THREE months, so in a sense THIS is also a kind of "variable" rate...

    If your guests have not already spoken to this, can they explain this a little.

    Thank you!

    • PA OCA img 2014-07-03 10:16

      David- While the utility can change their rate quarterly, it does not have the same type of variability as the rates charged by the electric generation suppliers under the variable price plans we have been discussing. The utilities purchase their power in the wholesale market under a Commission approved plan and adjust their price to the costs under the plan.

  • Radio Smart Talk img 2014-06-30 08:47

    Listener emails:

    People that made these switches were not informed or did not read the contract or were not truthfully fully disclosed the ramifications of they're switch.
    NOW,the people that have chosen to stay with their default provider,be it that it was caution and common sense,are now,going to be sold on the open market.
    Not making a choice is still a choice.

  • Radio Smart Talk img 2014-06-30 08:48

    Travis writes:

    I was lucky enough to have my default provider over the winter, so I didn't have the variable rate shock like many did.

    But then I went to be website to check on rates, and I found that there are very few, if any, truly fixed rate plans. Most so called fixed rate plans are only fixed for a certain time period. After that time period expires, then the rate becomes variable.

    As a consumer I don't want to constantly check electricity rates. I want a fixed rate like PPL offers where I don't have to constantly check it to see if it is affordable.

    It is definitely misleading to say that a rate is fixed for three months then becomes variable for a one year contract.

  • Radio Smart Talk img 2014-06-30 08:48

    Jim writes:

    Many times a receptionist at a business may unknowingly change the rate plan when the business owner may have a made a different decision. A written confirmation of switching by the customer should be required. However, the PUC has considered the written requirement but acquiesced to the industry lobby as this would be too burdensome to the suppliers. It seems that the PUC favors the industry over the consumer.

    (Current PUC policies permit "slamming" by Electric Suppliers. This is a practice whereby the supplier's salesperson can get a customer to change to their plan with just a verbal indication over the phone. Typically the salesperson will ask a question like, "would you like to save money on your electric?" and if the person says anything like "yes", they would cancel out their current contract and put them in their variable rate plan which may have a one month discount and thereafter float on the market at potentially higher rates. Further, the salesperson is not required to make sure they have the decision maker on the phone)

    • PA_PUC img 2014-07-01 10:22

      Jim -- The PUC's switching regulations have always required a confirmation letter that the utility sends the customer announcing that their new supply service will start on a certain date and to contact them if this is in error or not something for which they signed up. This requirement applies to all switching for all customer classes.

      The PUC's marketing regulations require also verification:

      However, these regulations apply only to residential customers as commercial entities are generally viewed as more sophisticated when it comes to shopping for electricity.

  • Scott LaMar img 2014-06-30 12:32

    Dan writes...
    One of the guests on the June 30 Smart Talk program on WITF concerning high variable electric rates stated that substantial penalties were imposed upon utilities for rules violations that resulted in consumers being charged high variable rate increases for electricity last winter. I called the show and pointed out that the utilities in violation pay the penalty money to the PUC, not to the victims who may include senior citizens on a fixed income and other low income individuals who can least afford such increases.

    With only about 40 seconds remaining in the program, the guest from the PUC stated that penalties paid to the PUC discourage utilities from future rules violations.

    While having rules-violating utilities pay fines directly to the PUC may discourage future rules violations, it also lets the STATE PUC participate in the windfall profits collected due to the unscrupulous practices of the utility companies!

    This would appear to create a serious conflict of interest for the PUC, does it not?

    Does this conflict of interest, self created by the PUC, put the PUC in a legally vulnerable position? Should the State Attorney General look into this?

    It takes very little common sense to conclude that the PUC would discourage future rules violations AND much better serve the public by imposing penalties that require the utility to pay penalties directly to the consumers.

    • PA_PUC img 2014-06-30 15:16

      Dan -- Good point. And something that is addressed in the Public Utility Code. The PUC does not receive the fines it imposes on those who violate the Public Utility Code or PUC regulations. Per the Public Utility Code, those fines go back to the state's general fund. This prevents the scenario you outlined.

  • Scott LaMar img 2014-06-30 12:35

    Leon says...
    My wife and I are Met Ed customers and have been for 36 years. In Oct. of last year they sent us an advertisement introducing us to Dominion Energy Solustions. They said we would save money by switching to them as an electric supplier. We have received many such advertisements over the years from Met Ed , so this time we decided to take their advice. The two year guarantee started in Dec. 2013 and ends in Dec 2015. I have received a letter from Dominion in April
    2014 stating that they will no longer be servicing electrictiy supply customers effective 5/27/14. They are turning us over to NRG residential solutions. Dominion claims that NRG will honor my contract. It seems that electric utilities can drop a customer at any time even though we pay our bills on time.. On May 30,2014 the Sentinel newspaper in Carlisle Pa. wrote a column that Met Ed is increasing their Default electric rates. The article claims the rates effective June 1, 2014 may increase by some 25 %. I am quoting the article that I saved. I would also like to say the article in the Wall Street Journal dated May 28, 2014 heading "Power-Price Rise Energizes Utility Shares" indicates the electric prices will double in a very short peroid of time. Things like Carbon emissions and renewable energy are forcing low cost coal fired energy producers to close down generation plants and being replaced by goverment subsidized much higher cost "Green" producers like wind, solar etc. I am not smart enough to debate the pros and cons of what is happening.
    I am looking for a great deal of information as to where we will be in three years and what the cost to my budget will be. My wife and I are watching our electricity use on a day to day reading from our smart meter. Once we review the dailey cost and compare it to past bills we will know how much money is at stake. If indeed this cost doubles say within three years we would then have a cost basis to look for other competative sources of energy such as natural gas, propane, solar etc.
    This action of going from one electric supplier to another is not the answer. One may save nickles and nimes but the larger picture indicates that a much larger far more costier plan is already happening and the average residential user does not have a clue as to when it's going to hit. If there is anything you can do to get people informed for the longer term I believe this information will be greatly appreciated. I am thanking you in advance and I think that your Smart Talk Show is great.

    • PA OCA img 2014-07-03 10:29

      Leon- To address the change from Dominion Energy Solutions to NRG, Dominion did not drop you as a customer. The company was purchased by NRG and the transfer of customers was part of the transaction. The transfer is not a reflection of a customer’s status with the company and as you said; your existing contract will be honored by NRG.

      We agree with the PUC that many outside factors influence the wholesale energy market and it is difficult to predict prices in the long term. We understand this uncertainly makes it difficult for households to predict what portion of their budget should be set aside for their energy needs. Shopping and energy conservation are two tools consumers have available to help control costs. In addition, we have default service in place which requires our electric utilities to purchase their power at the least cost over time.

  • Lisa img 2014-06-30 17:33

    Seriously, did the PUC spokesperson state that what would help our electric bills is having more natural gas pipelines in Pennsylvania? Absolutely off-base and inaccurate comment! Seems as if she and all public utility employees of the state of Pennsylvania are completely in the pockets of petroleum products companies like Williams. As a state employee she should be limiting her comments to her area of expertise. I highly doubt that she is environmentally qualified, economically qualified, or qualified in any other way to state what impact the Atlantic Sunrise and similar proposed pipelines will have on my electric bill. This was a sheer propaganda statement for the fracking industry.

  • PA_PUC img 2014-07-01 09:46

    David -- That's correct. The utility (Met-Ed, PPL, PECO etc.) can change their rate every quarter. The goal is to be sure the price they are charging reflects the price they are paying on the wholesale energy market. The prices can go up or down.

  • PA_PUC img 2014-07-01 09:55

    Leon -- Unfortunately many outside factors influence the wholesale energy market including weather and energy demand. So predicting prices out three years isn't something we can do with certainty. We can tell you that since you have indicated that you with a competitive supplier on a fixed-rate contract through the end of next year. You then did not pay the 25 percent increase from Met-Ed. You also have a predictable energy rate for the next 18 months that will allow you to use employ the conservation and other measures you talked about to save money on your electric bill.

  • Scott LaMar img 2014-07-03 07:29

    John writes...Looking at the bigger picture: We are in an era of faith in private markets to provide public services. To insert the profit motive into essential services such as utilities inevitably angers the consumer and can succeed only with the wonder of deceptive advertising. For many decades utilities were more rigorously managed by government, but today the oversight is a matter of the fox guarding the chicken house. The privatization process, that is, the selling of public assets and the surrender of public responsibilities to the marketplace, exacerbates social separation and income inequalities, but Americans have politically chosen that route and must pay the consequences. In a totally free market the consumer may find the will to build his own wind turbine in his backyard

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