Press Release

Boscola and Cawley Announce Work to Reform Electricity Pricing

Published on 6/15/2010

Filed under: Electric

Harrisburg - Senator Lisa M. Boscola and PUC Chairman James H. Cawley announced today that they will work together on behalf of Pennsylvania electric customers by advocating before the Federal Energy Regulatory Commission (FERC) to reform the retail pricing of electricity for consumers, businesses and the economy of Pennsylvania. 

The Senator and Chairman Cawley will seek to bring electric price relief to all classes of consumers by focusing on the wholesale cost of electricity. Wholesale costs are regulated by FERC, and the Senator and the Chairman believe that FERC can be more responsive to consumer needs by improving market design, resolving power transmission cost issues, providing retail customers with better tools to respond to higher electricity prices and making sure that smart meter grid technology is used effectively to help consumers reduce their electricity costs.

“FERC plays a critical role in determining consumer electric costs, yet few understand its role in determining what we all pay for our electricity,” Boscola said.  “We need to work more actively with FERC on their policies and rulings which may ultimately have a positive impact on electric pricing here in the Commonwealth.”

Chairman Cawley said, "I look forward to working with Senator Boscola to effectuate changes that will benefit all electric ratepayers of Pennsylvania. Working collaboratively will provide a stronger voice for Pennsylvanians before FERC."

Both parties will work together to encourage FERC to address the following issues:

*    Improving Wholesale Capacity Markets - Wholesale capacity markets represent a significant and growing element of the total wholesale cost of electricity.

*    Allocating Transmission Cost – Planning, siting and constructing Extra High Voltage backbone transmission facilities continues to be an unresolved regional issue, particularly in areas of the Commonwealth where chronic transmission congestion limits access to low cost generation.

*    Responding to Retail Demand – Currently, retail customers have limited ability to reduce their electrical costs by limiting their consumption to lower cost periods.  Retail customers need better tools to effectively respond to high generator prices, which will make wholesale competition more effective.

*    Improving PJM responsiveness to issues important to Pennsylvania retail customers - PJM, the state’s regional transmission organization, is a federally regulated public utility and is not directly subject to Pennsylvania regulation.  PJM must understand and respond to Pennsylvania’s concerns about the effect of its actions on retail customers.

*     Enhancing Regional Cooperation - Pennsylvania is one of 14 states impacted by wholesale electricity market issues.  Acting more cooperatively with other states combines the strengths of the states in PJM and better represents the interests of retail electricity businesses and residential customers before FERC and Congress.

Boscola said the time to address electricity pricing is critical because a majority (60%) of Pennsylvania electricity consumers is still under rate caps.  Those caps will be lifted on December 31, 2010.   She believes that the support of the Public Utility Commission Chairman to help work on these issues is a significant step in reducing retail costs of energy which was supposed to be the ultimate goal of competition as enacted by the General Assembly.

While FERC does not directly regulate retail electricity sales, it is the wholesale market regulator responsible for creating, maintaining and enforcing the critical conditions necessary for a fully competitive, non-discriminatory wholesale electricity market. FERC has also been given necessary power by Congress to create proper conditions and incentives to ensure the timely construction of necessary generation and transmission facilities to serve projected retail electricity demand and to ensure effective competitive downward pressure on prices.

Finally, the Senator and the Chairman said they will also work with our state’s Congressional delegation and recommend changes in the federal law affecting electricity pricing.

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