Default Electricity Service Must Protect Customers from Unnecessary Rate Spikes
HARRISBURG, Pa., Oct. 15, 2012 /PRNewswire-USNewswire/ -- AARP Pennsylvania today announced that it has joined with the Pennsylvania Utility Law Project to file a friend of the court brief in a lawsuit opposing the state Public Utility Commission's decision allowing a Pike County electricity provider to purchase power for its default service program exclusively on the short–term spot market.
The amicus brief was submitted Friday, October 12 in support of a lawsuit filed in Commonwealth Court by the state Consumer Advocate that seeks to overturn a PUC ruling allowing Pike County Light & Power Company to purchase 100% of its default service generation on the hourly spot market, the price of which is highly volatile.
"We're supporting this lawsuit because we believe the PUC ignored both state law and its own regulations that are designed to ensure that vulnerable customers remain protected from spikes in default service energy prices," said AARP Pennsylvania State Director Ivonne Gutierrez Bucher. "We are concerned that this decision could be used to destabilize default electrical service plans and effectively force customers into choosing a supplier on the open market."
Gutierrez Bucher said that in the Pike County Light & Power Company case, the PUC should have required the company to include some form of a fixed price contract for a portion of the default service load. State law requires default electricity service providers to acquire electric energy through a "prudent mix" of resources that are designed to provide adequate and reliable service at the least cost to customers over time.
"All consumers, especially those from low or fixed income households, require a level of electricity rate price stability that is best served through a mix of contracts designed to hedge against the possibility of energy price spikes," Gutierrez Bucher said. "Default service based on short-term prices puts consumers at enormous risk that the price of their electricity service will change frequently and could become unaffordable through no action of their own."
Currently, more than 60% of households statewide purchase electricity through default rate plans. In a recent telephone survey conducted by AARP Pennsylvania, 75 percent of respondents stated that it was either "extremely important" or "very important" that electric distribution companies continue to provide a standard plan at the lowest reasonable cost. When specifically asked how concerned they were about their costs of electricity increasing, 72 percent of survey respondents were "somewhat" or "extremely" concerned.
"Although consumers understand that utility rates are subject to change, it is particularly difficult for low or fixed income households to budget for electricity when those prices can change substantially or are based on short-term market rates, which are prone to price spikes," said Gutierrez Bucher.
AARP has 1.8 million members in Pennsylvania. AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people 50+ have independence, choice and control in ways that are beneficial to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for Americans 50+ and the world's largest-circulation magazine; AARP Bulletin, the go-to news source for the 50+ audience; AARP VIVA, a bilingual lifestyle multimedia platform addressing the interests and needs of Hispanic Americans; and national television and radio programming including My Generation and Inside E Street. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.
SOURCE AARP Pennsylvania