Utilities may have overchargedBy GRETCHEN METZ, Staff Writer
A consumer advocate group and a coalition of Pennsylvania manufacturers are urging regulators to decide whether utilities in the state over-collected billions of dollars from ratepayers since the start of electric deregulation more than a decade ago.
In a petition filed with the Pennsylvania Public Utilities Commission on Aug. 23, Citizen Power and the Pennsylvania Steel and Cement Manufacturers Coalition, which includes ArcelorMittal's Coatesville mill, argued the utilities overcharged consumers by as much $12 billion for so-called stranded costs stemming from deregulation.
Stranded costs are the differences between what the utilities would have collected from customers in a regulated environment and what they expected to recover in a more competitive landscape.
Stranded costs are on everyone's electric bill as "transition" charges, explained David Hughes, executive director of Citizen Power, a nonprofit energy advocacy group headquartered in Pittsburgh.
Thus far, PECO has collected $5.6 billion in stranded charges, Hughes said.
The petition asks the PUC to "review transition charges (stranded costs) paid by electricity consumers over the past 13 years and refund any overpaid collections to consumers," both businesses and residential.
The issue dates back to 1996.
That year, Pennsylvania deregulated the industry by enacting the Electricity Generation Customer Choice and Competition Act to create competition in the electricity markets, expecting lower prices.
According to the petitioners, utilities convinced the state Legislature that the lower prices would make certain electricity-generating assets uncompetitive. To level the playing field, the Legislature allowed utilities to collect a fee from all ratepayers to offset the expected loss.
The PUC "forecasted an amount" the utilities could col
lect but that amount was too high, according to Hughes.
"Customers deserve a refund," Hughes said. The ones making big money, he said, are the utilities' "big shareholders. Utilities are making record profits on the backs of the ratepayer."
Jennifer Kocher, press secretary at the PUC, said the petition was filed last week and "referred to the commission's law bureau." Because the matter is being reviewed, the PUC could not comment further.
PECO did not immediately return requests for comment.
ArcelorMittal, a member of the coalition with ESSROC Cement, Hercules Cement Inc. and Lehigh Cement, would have a lot to gain if a refund were to be awarded.
ArcelorMittal is one of the largest customers of both PECO and PPL, said Mary Beth Holdford, an ArcelorMittal spokeswoman.
ArcelorMittal Coatesville, which employs more than 800 Pennsylvanians and produces steel plate and other products, uses more electricity than the Borough of West Chester during an average year, Holdford said. It is a PECO customer.
ArcelorMittal Steelton is one of the largest electricity users in the commonwealth. The steelmaking facility, which employs 650 and produces train rail and other products, uses as much electricity as the City of Lancaster during an average year, she said. It is a PPL customer.
"Businesses in Pennsylvania, like ours, are competing in the global market and these costs hinder our ability to compete with both U.S. and foreign manufacturers that do not face the same electricity pricing rules as we do in Pennsylvania," said Dave Wirick, general manager at ArcelorMittal Steelton.
"Global competition and the amount of electricity our plant requires further stress the importance of competitively priced, reliable electricity to increase the sustainability of our operations."