Through the 15 years that Pennsylvania has deregulated its electricity market, a lot of consumers have been worried about price increases after the caps on rate increases were lifted. The good news is that prices have not increased as much as they did in the past. There are many factors that aid in reducing rate increases. One of them is the strong, thriving natural gas industry. The gas industry is flourishing in the Marcellus Shale which is located beneath Pennsylvania and New York. Rate spikes are also tempered by a slowing economy.
The legislature passed a law that allowed electric customers to choose their provider as the first step towards deregulation. In 1996, the legislature set in motion rates caps to eliminate monopolies. In order to open up the market, utilities that had sold power plants began to compete. The companies are now able to offer their customers the most affordable costs. Many residents can now search for Penelec energy providers. But this isn’t the end of the story. The Pennsylvania Legislature recently passed an ordinance that requires utility companies to cut their annual electricity usage by one percent before May 31 2011.
At present, Pennsylvania has 17 electric providers in the Philadelphia area. Each supplier offers a specific service. Some companies purchase default service power via competitive bidding. Others charge utilities to manage and deliver of energy. For those who do not choose an alternative provider, they will be served by their local utility. Regardless of the supplier the customers will still be provided with backup power in the event of power outage. It’s also an ideal option for families to secure a fixed rate plan to save money.
In response to rate hikes, the Pennsylvania Office of Consumer Advocate and the Office of Small Business Advocate filed complaints against the Companies. The state courts were unable to give relief to the businesses, so they decided to seek relief in federal court. The first count, Count I, in the complaint, claims that the PUC violated the Due Process Clause of the Fourteenth Amendment when it imposed the confiscatory rate. The FPA requires that rates be reasonable and fair. Counts II and III, the amended complaint, allege that the PUC imposed an unlawful cost-trapping rate. They claim that the Electric Competition Act was unconstitutional in its current version.
The companies are seeking a declaratory judgement in federal court and an injunctive relief before the Commissioners of the PUC. They claim that they were denied the opportunity to fully litigate the matter. They have also been unsuccessful in defending preemption claims in the state proceeding. In response the PUC Defendants assert that the Companies waived their argument against pre-emption in the federal court and that the state proceeding is a “judicial proceeding.” They also satisfied the District Court’s prompt arguments.
The Companies’ claims in Counts II & III raise new questions. They claim that the PUC’s classification of line losses as transmission-related costs is unlawful because it imposes a property interest on the Companies that prevents them from passing the line loss costs to their customers. The Companies also argue that the PUC’s classification of rate changes as transmission related costs is illegal because it robs the Companies of the property right to recover the federally approved costs of providing electric service.