Electric rate shock

DEREGULATION of Pennsylvania's electric rates is scheduled for 2010.

This will remove rate caps that have been in place for 10 years. Experts predict that this will increase electric rates to consumers up to 65 percent, with some consumer advocates arguing that the increase will be closer to 100 percent.

Some legislators say this could be the biggest tax increase in state history. Years ago, the electric companies promised that deregulation would create increased competition and savings for consumers. In return for deregulation, the PUC imposed caps on rate increases.

Now those caps are scheduled to expire. The promised reductions due to deregulation haven't materialized. We're now faced with passing on these increases starting in 2010.

Of the 16 states that adopted deregulation, none have successfully provided consumers with the promised lower utility costs. All are in fact doing much worse than states that continued to regulate their power industry as the public utilities that they are.

The American Public Power Association observed that "the move to expand so called 'competitive' energy markets has actually raised costs for consumers without the promised technological advances." Deregulated consumers in Delaware, Connecticut, Montana, Illinois and Maryland now face some of the highest rates in the nation. Baltimore Gas & Electric sought a 78 percent hike increase for the city, until state lawmakers acted and reduced the initial rise to 15-25 percent. Meanwhile, BGE's parent company, Constellation Energy, doubled its revenues. Its CEO's compensation is now near $5 million a year.

Despite its abundance of natural resources, Pennsylvania has some of the highest electricity costs in the nation. The state's electric companies are meanwhile predicting record profits, "charging ratepayers up to five times more than what it costs them to generate the power," according to state Sen. Lisa Boscola. With the impending increases, the number of families and businesses unable to pay their bills will increase, as will the number of companies likely to close or relocate to other states.

Figures show that utility shutoffs rose by 37 percent in 2008, compared to 2007. Haven't we learned that failed deregulation policies that inflate corporate profits cause the harm we are experiencing with the current financial crisis?

I understand the difficult choices facing working families. Pennsylvanians are struggling to pay bills, make ends meet and keep their jobs through this tough economy.

Is it fair to impose this added burden on the state's citizens? Should they now have to choose between proper nutrition, clothing and housing over necessities such as electricity?

This is a frightening but altogether realistic possibility. This latest attempt to gouge the consumer should be met with outrage by all Pennsylvanians.

It is time for the representatives of working families and small businesses to act on behalf of their constituents and either reject deregulation, or impose restrictions to abate an economic disaster. History has spoken and offered compelling evidence of the repeated failure of utility deregulation to benefit to the public.

The times are already too challenging to allow history to repeat itself and make our state another casualty. If we act now, we have time to protect the working families of Pennsylvania and ease the effects of these additional growing economic pains.

It falls to us, the citizens of the commonwealth, to oppose the corporate greed of the utilities. It is our responsibility as parents, as neighbors, as Pennsylvanians, to bind together against deregulation so that no Pennsylvanian ever has to choose between food and lights again. *

Tom Knox is a Democratic candidate for governor in 2010.