Pennsylvania Power & Light Co.'s top executive said Wednesday (9/27) the state Public Utility Commission's approval of a 4.5 percent rate increase will have a positive effect on PP&L's financial outlook. It will not, however, slow the Allentown-based utility's efforts to drive down costs.

"For more than two years, we have been aggressively reshaping PP&L through restructuring and coordinated re-engineering efforts," said William F. Hecht, PP&L's chairman, president and chief executive officer. "These continuing efforts are establishing a cost structure that will enable PP&L to minimize price increases for customers and to continue providing customer service that is among the best in the nation while generating a fair return for our shareowners. We plan to intensify these efforts in the coming months."

The rate decision improves PP&L Resources' financial outlook, Hecht said.

"Based on the company's projected financial performance, we expect to grow shareowner value, and that includes growth in our common stock dividend over the long term," he said.

PP&L remains committed, Hecht said, to a corporate objective of keeping its prices as stable as possible for customers. In fact, he pointed out, the rates approved by the commission include a $90 million decrease in customer base rates, beginning in 1999.

The PUC's Wednesday decision increases PP&L's base rates by $107 million, but that increase is reduced by a credit to customers resulting from bulk power sales PP&L has made to other utilities. This results in a net increase of $85 million or 3.8 percent. The effect on individual customer bills will vary depending on the pattern and level of use.

This is the first base rate increase for PP&L since 1985. Because of a number of decreases since that time, even with this increase, the prices PP&L customers pay for electricity has risen by only 1.6 percent in the past 10 years. PP&L's rates remain highly competitive with those in the region. The average residential rate of PECO Energy, which is attempting to take over PP&L, still is about 50 percent higher than PP&L's.

Hecht said he understands the difficult task the PUC faced in making the decision on the company's $261 million, 11.7 percent, increase request.

"In deciding the case, the commission needed to balance a number of competing interests: concerns about rates for residential customers; the need to have competitive industrial and commercial rates to encourage economic development and job growth; and the need to provide PP&L Resources with an opportunity to earn a return for investors so that we have the financial resources to provide quality service for customers," said Hecht.

The rate increase is effective Sept. 28. The new rates will not be reflected on customer bills until the PUC approves the company's proposed new rate schedules, which the commission is expected to review in late October.