Rendell threatens power 'crisis,' price controls; Exelon falls
Exelon Corp. stock tumbled to a 20-month low this afternoon as Gov. Rendell, speaking at a hearing in Philadelphia, threatened to extend price controls to protect consumers from higher rates.
Exelon Corp. stock tumbled to a 20-month low this afternoon as Gov. Rendell, speaking at a hearing in Philadelphia, threatened to extend price controls to protect consumers from higher rates. Rendell's statement here.
Rendell said he'll act this fall if Exelon's allies and their antagonists in the General Assembly don't cut a deal that would replace the current price controls. Without caps, or at least a compromise over rate hikes, he threatened "incredible economic hardship" and "60 percent" power rate increases by Exelon and other utilities..
What politician could make even a compromise deal to boost electric rates? Sen. Vincent Fumo, D-Phila., used to mediate between Exelon's Peco Energy arm and its critics, and cut deals to protect inner-city power users. But he's busy this week, at his trial on federal corruption charges.
Peco accepted rate caps ten years ago, as part of a deal that was supposed to attract competing power suppliers, who would set a market price so the state could stop regulating. But that hasn't worked, despite the millions the state spent on promotional advertising.
So prices are flat, but "our costs go up," Exelon CFO Matthew Hilzinger complained to investors at a Lehman Bros. conference in New York last Thursday. Exelon had hoped to have "full competitive retail markets in Pennsylvania...in the first half" of this year.
That didn't happen, so Exelon is now preparing an end run around the General Assembly. It plans to file for higher rates with the state Public Utility Commission, citing higher costs, fairness, and efficiency. "There is a regulatory path to full market prices in Pennsylvania by 2011," Hilzinger concluded. Rendell said the PUC should phase increases gradually.
