Utility raising rates by 16.2%

By Kim Leonard
TRIBUNE-REVIEW
Friday, December 1, 2006

Customers of Duquesne Light Co. will see their bills rise an average of $10.36 a month -- or 16.2 percent -- in a rate increase that was criticized by a consumer group and the chairman of the state Public Utility Commission.

The PUC on Thursday approved by a 4-0 vote a smaller increase than the Downtown-based utility had requested and one that will raise power distribution rates by $117 million. These rates cover the cost of moving power over lines to homes.

Residential customers using an average of 600 kilowatt hours of electricity a month will see their bills increase from $63.87 to $74.23.

The rates take effect Jan. 6. Most customers won't notice the change until the February billing cycle, the company said.

"It is a hard swallow, frankly," said David Hughes, executive director of Pittsburgh-based Citizen Power, a consumer advocacy group that challenged the rate hike, but agreed to the increase in a settlement in September along with 17 other complainants.

Hughes said his group was afraid the PUC would grant the company more without a settlement. "The truth is, we had to make a judgment call," he said.

PUC Chairman Wendell F. Holland criticized the settlement. "This case has been quite troubling to me," he wrote in a statement, pointing out the settlement gives Duquesne Light 81 percent of what it sought.

The PUC rarely has found such a dramatic increase reasonable or in the public interest, Holland wrote.

The rate increase affects more than 580,000 customers in its service territory, mainly Allegheny and Beaver counties.

Duquesne Light sought a $143.7 million increase, which would have raised the average bill by 18.8 percent, to $75.86 a month.

The average bill accounts for both the distribution rate increase approved by the PUC and an expected transmission hike. Transmission rates cover the cost of moving power from generating plants to distribution stations.

Duquesne Light is requesting an additional $19.2 million transmission rate increase. The Federal Energy Regulatory Commission, which oversees transmission rates, may decide today on that request, company spokesman Joe Vallarian said.

Duquesne Light said the distribution and transmission rate increases -- the first since 1987 -- are needed to pay for its ongoing $500 million upgrade to transformers, lines and other power infrastructures.

Duquesne Light said in a statement that the new rates still will be below those of about 15 years ago.

Customers then were paying to maintain the company's generating plants, and the average bill was $84.36. The plants were sold in 2001, and bills dropped dramatically to an average $59.76 by 2003. They began to climb again as energy supply costs rose.

The company's most recent rate change was an electricity supply-related increase in January 2005. Average residential bills rose by about 7 percent.

Kim Leonard can be reached at [email protected] or (412) 380-5606.