Press Release

PUC Approves Penelec, Met-Ed Voluntary Pre-Payment Plan to Mitigate Projected Rate Increases

Published on 2/26/2009

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today approved a settlement that will allow Pennsylvania Electric Co. (Penelec) and Metropolitan Edison Co. (Met-Ed) to begin a Voluntary Pre-payment Plan (VPP) to help customers flatten projected rate increases.

"In May of 2007 the Commission approved a plan to assist retail electric customers through the expiration of the generation rate caps.  As part of this plan, we adopted a policy statement that encourages electric distribution companies to offer a rate mitigation option to residential and small commercial customers if the total retail rate would increase by more than 25 percent at the time the rate caps end," said Commissioner Kim Pizzingrilli in a statement.  "The companies will provide notice to their customers at the time the Commission acts on the VPP, before implementing it and during the term of the opt-in program. In addition, the companies will continue to educate consumers and provide information regarding the expiration of the rate caps, and that energy efficiency and conservation measures are available to assist customers in managing the size of their energy bills.  I find that the plan is consistent with the policy guidance we have provided electric distribution companies and is in the public interest."

The Commission voted 5-0 to approve the VPP, which is designed to allow customers to smooth out the increases for supply service that will occur when the companies’ generation rate caps expire Dec. 31, 2010. Rate caps were placed on generation rates as part of the 1996 restructuring of the electric industry. The VPP settlement was reached among the companies, Office of Consumer Advocate (OCA) and Office of Small Business Advocate (OSBA).

Under the plan, Penelec and Met-Ed customers can opt to pay a VPP charge monthly from March 2009 through December 2010. The amount collected plus 7.5 percent interest would then be paid back to those customers in the form of a VPP credit on participating customers’ bills from January 2011 to December 2012. The plan is available to residential and certain small commercial customers. 

As part of the settlement, the Commission directs the companies to begin its public notice campaign as soon as practical and to submit a timeline to identify its target dates for customer notice, as well as the anticipated start date for the VPP payments.

According to the 2008 consumer-education plan approved for FirstEnergy in regards to expiration of rate caps, the company must submit related outreach materials to the Commission for approval and to OCA and OSBA for input.

In May 2007, the Commission approved a plan to mitigate and prepare Pennsylvania electricity customers for significant price increases that may occur as generation rate caps expire. The mitigation measures include:  energy efficiency; demand side response; default service supply procurement to help insulate customers from large fluctuations in market prices; rate mitigation programs; updated low-income programs; the removal of barriers to retail choice; and consumer education.

 The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner.

For recent news releases, audio of select Commission proceedings or more information about the PUC, visit our Web site at www.puc.state.pa.us.

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Docket No. P-2008-2066692

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