Group alleges state utility companies overcharged by billions

Electric utility companies in Pennsylvania may have overcharged customers by billions of dollars over the past 13 years via charges that helped deregulate the industry, a Pittsburgh-based energy-advocacy group believes.

Consumers might be due refunds of more than $1,000 each if state utility regulators determine the companies collected more in transition charges for so-called "stranded costs" than they actually spent on the deregulation process, said Citizen Power of Pittsburgh and the Pennsylvania Steel and Cement Coalition.

The two groups filed a petition Monday asking the Public Utility Commission to compare the $12 billion in transition charges paid by customers during the past 13 years against the original estimates of those costs.

"We have a strong suspicion that a large part of the $12 billion was unjust and unreasonable. At least $9 billion of the $12 billion collected was unjust and unreasonable. The utilities 'gamed' the system to collect more money, making the transition prices higher than projected," said David Hughes, executive director of Citizen Power.

"We hope the PUC will do what is right for Pennsylvania in these tough economic times," Hughes said.

The PUC declined to comment on the petition, which will be referred for review, said spokeswoman Jennifer Kocher.

The "stranded costs" include investments in power plants before the 1997 Electricity Generation Choice and Competition Act was passed, which deregulated the electric industry in the state, a process that only now is being completed. The last caps on rates are set to expire at the end of the year.

Under deregulation, consumers were promised competition from power suppliers that would give them a choice of providers, potentially reducing rates. The electric distribution companies were permitted to recover earlier investments in power plants that would be impossible to recoup because of competition. Fees collected from all ratepayers were to offset the expected loss to the value of those "stranded assets."

Competition in the state, with more power suppliers serving customers, never developed as hoped.

"It seems to us that the Legislature did want someone to find out what the actual stranded costs were. Someone needs to do the math, and the commission is the best to do that. We feel the original legislation expects that the PUC will do that ," said Paul Williams, a consultant to the Pennsylvania Steel and Cement Coalition, an ad hoc group of six major employers.

Allegheny Energy Inc., Greensburg, has not seen the petition and declined to comment, spokesman David Neurohr said. Collection of the stranded costs from Allegheny Energy customers, which totaled $670 million, ended June 25, Neurohr said.

Hughes estimated that the average Duquesne Light customer using 1,000 kilowatt hours a month could be entitled to a refund of about $1,200, if the commission finds that three-fourths of the customer's $1,632 payment on transition charges since 1999 was "unjust and unreasonable."

Duquesne Light spokesman Joseph Vallarian could not be reached for comment.

Joe Napsha can be reached at or 724-836-5252.