Press Release

PUC Approves Settlement to Cut Duquesne Residential Rates 21 Percent

Published on 11/29/2000

Filed under: Electric

HARRISBURG, Pa. – Duquesne Light (DQE) residential customers will see their electric rates cut by 21 percent beginning in February 2002 under a settlement approved today by the state Public Utility Commission (PUC) and agreed to by the state’s Consumer Advocate and Small Business Advocate.

The rate cut means the average residential customer using 500 kilowatt-hours of electricity per month will see his bill decrease by approximately $12.60, from $62.87 to $50.27. In addition, customers may enjoy even greater savings by shopping for electricity and selecting a supplier that offers generation rates below DQE’s price to compare.

Today’s action outlines how DQE will meet its legal obligation as provider of last resort while a fully competitive electricity market develops in Western Pennsylvania. Customers who do not shop under the state’s electric competition law continue to receive electricity from their local electric company under what is called provider of last resort service. The PUC directed DQE to develop a proposal on how to deal with these customers when it approved DQE’s plan in April to sell all its generation assets to Orion Power.

Because electric competition in Western Pennsylvania is still in an early development stage, the PUC believes it is critical to have a process in place that adequately protects customers during this period, said PUC Commissioner Terrance J. Fitzpatrick.

"The rate cuts we approved today definitely help residential customers because DQE has traditionally had some of the highest electric rates in the state," he said. "It also provides stability for ratepayers during this transition period by extending the rate caps on generation, transmission and distribution for several additional years.

"In addition, the increase in the price to compare should promote more shopping by customers in what has already been a very active retail market," he added.

Overall, all DQE customers will see a 17 percent rate reduction. The rate cuts go into effect for each rate class when DQE has finished collecting its stranded costs – called a competitive transition charge on customer bills – from each class.

Fitzpatrick emphasized that the agreement provides several other consumer-friendly provisions. In addition to the rate cuts, DQE will freeze its generation rates established in today’s settlement through December 31, 2004. Transmission and distribution rates will also be capped through December 31, 2003, two years longer than originally required by the electric competition law.

Duquesne also agreed to increase annual funding of its Low Income Usage Reduction Program (LIURP) to $1.75 million in 2003 and 2004. The company will also add special one-time payments of $950,000 to its LIURP fund for 2002, 2003 and 2004.

Fitzpatrick added that today’s settlement also promotes the electric competition program establishing several measures to boost competition among suppliers. The measures include:

• Increasing the system average price to compare for typical residential customers to 5.5 cents per kilowatt-hour in (year) in 2002. This should enable generation suppliers to develop competitive offers in DQE’s service territory.
• A commitment by DQE to join or form a regional transmission organization (RTO) in Western Pa.
• Allowing suppliers greater access to customer information, making it easier to provide offers to customers. For customers who have authorized the release of their information, suppliers will have access to the most recent 12 months of electric use.
• Coordinating with the Consumer Advocate’s Office (OCA) to distribute to all its customers copies of the OCA’s shopping guide that shows the prices being offered by suppliers in DQE’s service territory.

The PUC voted 4-0 in favor of the settlement. PUC Chairman John M. Quain was not present. Other parties signing the settlement include the PUC Office of Trial Staff, Citizen Power, the Duquesne Industrial Intervenors, Enron Energy Services and Dominion Retail.

Under its original restructuring agreement, DQE’s generation rates were capped through December 31, 2005, or until the company paid off its stranded costs. Once stranded costs are paid off, the rate caps are lifted and the utility may charge market rates for electricity. The Pittsburgh utility sold its generation assets to Orion Power in April and estimates it will pay off its stranded costs in 2002.

For additional press releases or more information about the PUC, visit our website at http://puc.paonline.com.

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