Business

March 28, 2008

PPL gets PUC nod for more electricity

PPL Electric Utilities announced on Thursday that the state Public Utility Commission had approved its contracts for another portion of the electricity the utility expects to need in 2010, when state-regulated rate caps expire.

The distribution arm of Allentown-based PPL Corp. has now secured half of what it expects to need and estimates that a residential customer using 1,000 kilowatt-hours per month will see a monthly bill increase of 34.4 percent, or about $36.65.

Small-business customers would pay between 23.8 percent and 42.8 percent more.

The company contracted for another 850 megawatts, paying $108.80 per megawatt-hour for residential customers and $108.76 per megawatt-hour for small commercial and industrial customers, including the Pennsylvania gross receipts tax and adjustments for line losses. The remaining purchases are scheduled for fall 2008, spring 2009 and fall 2009.

The prices paid are about $3 per megawatt-hour more than PPL paid in October for the second of six energy buys, but PPL said the estimated bill increases are slightly lower than the October estimate because PPL’s rates have increased at least 10 percent since then, once from a rate increase granted by the PUC and again from a court-ordered rate adjustment that increased residential rates and lowered business rates.

PPL blamed the price increases on the rising costs of fuel. Deregulation, which was legislated in 1996, has allowed residents to shop for electricity, but PPL admitted that its customers have “few competitive options for electricity supply today” because rate caps have kept prices artificially low. Industry watchers warn that a robust competitive market likely won’t materialize after rate caps expire because competitors will face too many financial obstacles to entering the market.

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