Council to mull a city energy cooperative
By Jeff Shields and Andrew Maykuth
The Philadelphia Inquirer, March 12, 2010
Philadelphia City Council will consider establishing Philadelphia's own energy cooperative to harness consumer buying power to offset an expected spike in electricity prices next year.
The full effect of the 1996 deregulation of electric energy is already being felt around the state and will hit Philadelphia next year as rate caps meant to protect consumers expire.
Today, Councilman Darrell L. Clarke introduced a bill that would create a new Philadelphia Energy Authority.
The Energy Authority would serve as a cooperative through which residents, businesses and government could combine their buying power for cheaper electricity offer discounted electricity as an economic development tool, said the city's Consumer Affairs Director Lance Haver.
"This is an important first step to protect consumers, small businesses and the city itself from skyrocketing electric rates that, without any action, would go into effect when the electric rate caps come off," said Haver.
Sonny Popowsky, the state's Consumer Advocate, said similar arrangements are under consideration on the state level, including a House bill to allow an authority to buy power on behalf of its residents.
A Philadelphia authority could find itself competing in a potentially crowded market of commercial power suppliers who are poised to move into Peco's territory when rate caps are lifted at the end of the year.
Under a 1996 state law deregulation the supply of electricity, Peco's rates were frozen until the end of 2010 to allow the company to recover its investments before competition opened up. Peco has a monopoly on the wires and infrastructure that transmits electricity. Customers under the 1996 law can buy the actual power from anyone who generates it. Many consumers don't do this, and Peco becomes the default dealer and deliverer of electricity.
Peco's rates for customers who don't shop around are expected to go up about 10 percent at the end of the year.
In the 23 counties served by PPL Electric Utilities, where rate caps expired on Jan. 1, the utility's base rate went up about 30 percent. Nine power suppliers have entered the PPL market for residential customers “ seven offer discounts to PPL's rates, and two offer customers renewable power options at a higher cost.
Under Pennsylvania law, electric utility customers will be free to shop around for companies that generate power, which accounts for about two-thirds of a typical bill. Peco will remain the local distribution company that maintains the wires through which the power reaches customers, and Peco will continue to handle billing and customer service for all residential customers on its system.
While the consumer aspect of the bill was talked up today in city council, it would create another politically appointed, 5-member governing board to oversee the authority. Clarke left blank the section on how the board members would be appointed.
The full effect of the 1996 deregulation of electric energy is already being felt around the state and will hit Philadelphia next year as rate caps meant to protect consumers expire.
Today, Councilman Darrell L. Clarke introduced a bill that would create a new Philadelphia Energy Authority.
The Energy Authority would serve as a cooperative through which residents, businesses and government could combine their buying power for cheaper electricity offer discounted electricity as an economic development tool, said the city's Consumer Affairs Director Lance Haver.
"This is an important first step to protect consumers, small businesses and the city itself from skyrocketing electric rates that, without any action, would go into effect when the electric rate caps come off," said Haver.
Sonny Popowsky, the state's Consumer Advocate, said similar arrangements are under consideration on the state level, including a House bill to allow an authority to buy power on behalf of its residents.
A Philadelphia authority could find itself competing in a potentially crowded market of commercial power suppliers who are poised to move into Peco's territory when rate caps are lifted at the end of the year.
Under a 1996 state law deregulation the supply of electricity, Peco's rates were frozen until the end of 2010 to allow the company to recover its investments before competition opened up. Peco has a monopoly on the wires and infrastructure that transmits electricity. Customers under the 1996 law can buy the actual power from anyone who generates it. Many consumers don't do this, and Peco becomes the default dealer and deliverer of electricity.
Peco's rates for customers who don't shop around are expected to go up about 10 percent at the end of the year.
In the 23 counties served by PPL Electric Utilities, where rate caps expired on Jan. 1, the utility's base rate went up about 30 percent. Nine power suppliers have entered the PPL market for residential customers “ seven offer discounts to PPL's rates, and two offer customers renewable power options at a higher cost.
Under Pennsylvania law, electric utility customers will be free to shop around for companies that generate power, which accounts for about two-thirds of a typical bill. Peco will remain the local distribution company that maintains the wires through which the power reaches customers, and Peco will continue to handle billing and customer service for all residential customers on its system.
While the consumer aspect of the bill was talked up today in city council, it would create another politically appointed, 5-member governing board to oversee the authority. Clarke left blank the section on how the board members would be appointed.