Power rate plan advances

By Kim Leonard

Tuesday, May 8, 2007

Duquesne Light Co. appears to be closer to gaining approval for a plan that would raise customers' monthly bills about 9 percent, starting in January.

The company has reached a settlement with 18 consumer and business groups and other critics of its proposal to supply power from 2008 through 2010. The deal changes some of the company's plans to serve businesses, but leaves intact a $6.68 per month increase in the average residential bill.

That means a customer using 600 kilowatt hours a month would pay $78.98. "It is amazing that everybody said, 'We're fine with the present proposal,'" David Hughes, executive director of Squirrel Hill-based Citizen Power, said Monday.

"There really wasn't an attempt to lower the rate," he said, adding that his group has been pushing Downtown-based Duquesne Light on environmental issues, and believed the state Office of Consumer Advocate would challenge the residential rate in proceedings before the state Public Utility Commission.

The settlement now goes before an administrative law judge, then to the full PUC for approval. It affects the power-generation part of customers' bills and wouldn't impact those who buy power from other suppliers.

Irwin A. "Sonny" Popowsky, the state consumer advocate, said, "Duquesne has done a better job than any other utility in managing the impact" of rising prices. He added that the company negotiates with suppliers rather than holding auctions, which have led to big increases elsewhere.

Duquesne Light has 585,000 customers, mostly in Allegheny and Beaver counties. The settlement in its "provider of last resort" case that could be approved by July also would:

= Allow large commercial and industrial customers -- shopping centers and manufacturing plants, for example -- who still buy power from Duquesne Light to pay "day ahead" rates based on forecasts from PJM Interconnection, which runs the region's power grid. The utility's original plan offered only market prices that change by the hour. About 70 of 870 large customers in the area still buy power from Duquesne Light.

With the forecasts, the largest customers could look at the day ahead and opt to cut or curtail their usage if prices are high, said Pam Polacek, an attorney representing a group of industrial customers in the Duquesne Light case. "It gives them a little more price certainty," she said.

= Break smaller and midsize commercial customers into two groups. Those that use 25 to 300 kilowatts, such as a department store, would move gradually toward market pricing over three years. And those that use less than 25 kilowatts, such as a fast-food restaurant, would have a fixed price for three years.

The utility's parent, Duquesne Light Holdings Inc., said separate transmission and distribution rate increases that took effect early this year boosted its first-quarter bottom line.

The company had a net profit of $25 million, or 28 cents per share, for the first three months of the year, compared to $14.4 million, or 18 cents, for the same period a year ago. Total revenues were $263 million for the quarter, compared to $208.4 million a year ago.

Duquesne Light is preparing to be acquired by an investment consortium headed by a unit of Australia's Macquarie Bank. The $3 billion deal is expected to be completed by late June.

Kim Leonard can be reached at kleonard@tribweb.com or (412) 380-5606.


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