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House Committee Examines Spikes in Electric Bills, Pickett Says
3/20/2014
HARRISBURG – Members of the House Consumer Affairs Committee heard from energy experts about variable rate electric generation plans, which have led to thousands of consumers from around the Commonwealth and across the Northern Tier receiving high increases in their electric bills, said Rep. Tina Pickett (R-Bradford/Sullivan/Susquehanna).

“As a member of the House Consumer Affairs Committee, I have been watching this issue closely, and looking to see if any type of legislation could help prevent these types of dramatic spikes in the future,” Pickett said. “Today, the committee heard from experts who explained why these spikes occurred, largely due to the high demand for power stemming from this harsh winter.

“We are also encouraged by a number of steps being taken by the Pennsylvania Public Utility Commission (PUC) in an effort to raise consumer awareness of variable rate plans and shorten the amount of time to switch to another supplier,” Pickett said. “Those recommendations address two of the most common concerns by residents, and I am hopeful these will prevent these types of situations in the future.”

Competitive electric generation suppliers are not public utilities and their rates are not subject to government regulation. These suppliers operate in a competitive, free market environment. The terms and conditions of service offered by a competitive supplier are contained in the contracts it offers to customers.

Variable rate contracts from electric generation suppliers are generally subject to a promotional rate period, followed by fluctuating monthly rates based on wholesale electric prices. These variable rates change based on wholesale market conditions. In some cases, electric bills with variable rates were 300 percent and 400 percent higher than normal.

Testifying before the Consumer Affairs Committee were Robert F. Powelson, chairman, PA Public Utility Commission; Mike Kormos, executive vice president of operations, PJM; Ritchie Hudson, PA state chairman, Retail Energy Supply Association; Terry Fitzpatrick, president and CEO, Energy Association of Pennsylvania; Tanya McCloskey, acting consumer advocate, PA Office of Consumer Advocate; and Patrick M. Cicero, co-director, Pennsylvania Utility Law Project.

All who testified shared a concern that greater consumer education is needed so that customers can better understand the differences between variable and fixed rate plans. Additionally, consumers expressed concern about the long wait time, between 16 and 30 days, to switch to a new supplier.

In the meantime, the PUC noted that it is investigating whether any companies engaged in unscrupulous business practices that led to higher than normal bills.

Several pieces of legislation are being developed in response to the variable rate plan situation this winter and will be examined to see if there are legislative steps that can be taken to further protect consumers.

When a consumer signs up for service from a competitive generation supplier, Pickett said it is important to carefully review the terms and conditions of service, which contain important information regarding the type of rate (fixed or variable), how the rate is determined, if the rate includes taxes and fees, and if the contract is subject to early termination or cancellation fees.

Residents can watch the video footage from the hearing at www.RepPickett.com.

Representative Tina Pickett
110th District
Pennsylvania House of Representatives

Media Contact: Jennifer Keaton
(717) 705-2094
jkeaton@pahousegop.com  
RepPickett.com / Facebook.com/RepPickett

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