Energy Consumers First Says Merger Should Offer More to Ratepayers

Dec 21, 2010, 13:10 ET from Energy Consumers First

INDIANA, Pa., Dec. 21, 2010 /PRNewswire/ -- Electric choice advocates yesterday expressed disappointment that a state administrative law judge has voiced support for the merger of First Energy and Allegheny Power without fully facilitating the design of competitive markets that would result in an estimated $1 billion in consumer rebates.

"The ALJ said the only test he could apply was 'does this merger make things worse for consumers' rather than 'how can we use the leverage of a merger proceeding to improve things for consumers,'" said Barbara Hafer, honorary chair of Energy Consumers First (ECF).

In a ruling issued earlier Monday, an administrative law judge recommended that the Pennsylvania Public Utility Commission (PAPUC) to allow the merger to move forward as proposed by the two utilities.  Several competitive electricity suppliers have petitioned the PUC to condition the merger on a reform of the state's "default electricity provider" program which allows electric supply companies affiliated with distribution companies to provide electricity to consumers who do not actively seek a competitive source of electricity.  Critics contend the "utility supplied" program results in four out of five households opting out of electric choice.

"The administrative law judge has passed up an excellent opportunity to bring real competition to the First Energy marketplace by enabling two or three or maybe even more companies to bid on the right to provide electricity to blocks of 10,000 or 50,000 or 100,000 customers," said Hafer, a former state Treasurer and Auditor General. "Even better, the proceeds of the auction would be divided among the consumers and would amount to an immediate rebate of $150 to $500 per household along with lower rates per kilowatt hour."

Hafer said real competition, where no electricity supplier accounted for more than 50 percent of the market, would help cap and even lower home energy costs in future years.  "When you have one company controlling 70 or 80 per cent of the market, you still have a de facto monopoly.  The auction and rebate approach in the First Energy/Allegheny service areas – which amount to some 2 million consumers – would be an excellent demonstration of the power of true electric competition," she said.

SOURCE Energy Consumers First