August 9, 2008

Ppl Details Phase-In Rate Hike Option

By Tim Mekeel

The choice is yours.

Do you want to wait about a year, then jump in?

Or would you rather put your toe in now and take five years to fully immerse yourself?

It's a decision that every PPL Electric Utilities residential customer faces, now that the state approved the company's optional phase-in of an upcoming record rate increase.

By a 5-0 vote Thursday, the state Public Utility Commission allowed PPL to roll out the voluntary program.

The plan is the company's response to an estimated 34.4 percent rate hike expected at year-end 2009, when state-mandated rate caps expire.

That's a serious future shock, which PPL recognizes. So it devised an alternative, unveiling the proposal a year ago.

"Higher prices ... will not be easy for customers," said PPL president David G. DeCampli in a prepared statement.

"We believe it's important to give our customers options to help them manage the transition. ..."

Here's how the phase-in option for residential and small business customers will work.

Customers will get an 8 percent rate hike this October, an 8 percent rate hike in January 2009, and 5 percent rate hikes in January 2010, January 2011 and January 2012.

So in effect, from October until year-end 2009, PPL customers will be paying ahead on the rate increase to come. PPL will add 6 percent interest to these advance payments.

Customers can withdraw from the program at any time and get full credit, including interest, for their advance payments.

Enrollment begins Aug. 27. PPL will notify customers about the option plan via bill inserts and a special mailing. Customers will be able to enroll in three ways:

Use the tear-off reply and postage-paid envelope in the mailing they will receive.

Use a link on the company's Web site,

Call a toll-free number, 1-866-597-2010. Representatives will be available weekdays from 8 a.m. to 7 p.m. and Saturdays from 8 a.m. to 5 p.m.

Since the state deregulated the electric industry, PPL Electric Utilities does not own power plants. It buys power from other companies, then delivers this power to its customers.

Under state law, PPL passes along the cost of this power to its customers without markup for profit.

This cost, known as the generation charge, has been capped by the state for a decade at a price that's now far below the market price for power. But the cap expires at year-end 2009.

PPL could have waited until year-end 2009 to buy more power, gambling on the state of the market at that time.

But, having seen other utilities try that strategy and get stung by rate hikes as high as 70 percent, PPL elected to spread out its buys over three years.

Now halfway through that spread-it-out purchasing process, PPL predicts that the rate hike will be 34.4 percent.

For the residential customer using 1,000 kilowatt hours per month, the monthly bill will rise $36.65, says PPL. All PPL customers, whether enrolled in the phase-in program or not, will be free to switch to a competing supplier, if that competitor offers a better price.

(c) 2008 Intelligencer Journal. Provided by ProQuest Information and Learning. All rights Reserved.