UNIVERSITY PARK, Pa. – Rate caps that have kept the price of electricity relatively low are set to expire, and an energy expert in Penn State’s College of Agricultural Sciences urges customers, such as farmers who use a lot of electricity, to be prepared to deal with higher costs.
Depending on which utility company provides your electricity, your rate cap protection already may have already expired, noted Dennis Buffington, professor of agricultural and biological engineering.
Expiration date. “But for the large utility companies in Pennsylvania, the rate caps still are in effect until Dec. 31, 2009, for PPL and Dec. 31, 2010, for Allegheny Power, Met Ed, Penelec and Philadelphia Electric.”
Rate caps on the price of electricity have been in effect throughout the state (with the exception of the areas served by the rural electric cooperatives) since late in 1996, when the deregulation of electricity generation was approved.
These rate caps – enforced by the state Public Utility Commission – provide price protection for consumers. The utility companies were protected, as well, by the tangible and intangible transition fees that consumers paid with each monthly billing statement.
“The bottom line is that consumers have experienced no more than nominal annual price increases in electricity – 5 percent or less – since 1996,” Buffington said.
“These small increases have been occurring at the same time that prices for oil, natural gas, propane, coal and even wood have skyrocketed.”
Uncertainty. There is considerable uncertainty concerning what will happen with the price of electricity in two or three years, Buffington pointed out.
“I have heard predictions ranging from a low of a 40 percent increase to as high as a 200 percent increase. We all know that such dramatic price increases will have a profound impact on every person and every business in the state.”
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