PUC’s Further Postponement of Decision Disappointing, Precludes July 1 Start

Expressing disappointment with the continued postponement of action by the Pennsylvania Public Utility Commission, PPL Electric Utilities said Thursday (5/1) that it will not be able to start a rate phase-in option for residential and small business customers on July 1 as originally proposed.

At its public meeting Thursday, the PUC did not vote on PPL Electric Utilities’ plan to give residential and small business customers an option to adjust gradually to higher prices in 2010 after a decade of price controls. The plan requires PUC approval.

“Customers should have options for managing higher energy costs,” said David G. DeCampli, president of PPL Electric Utilities. “We remain hopeful that the PUC will approve the plan in time, but are extremely disappointed with the delay, which keeps us from offering this option as a way to help our customers.”

Without a decision from the PUC, PPL Electric Utilities must delay the planned start date for the phase-in option to allow adequate time for PPL Electric to publicize the plan and for eligible customers to make an informed choice about whether to enroll.

“We believe 60 days is the minimum time needed to have an effective customer education and enrollment period,” DeCampli said. “We have informed the PUC that the earliest we could begin the phase-in option is now August 1. The longer the program is delayed, the less effective it would be in smoothing out higher costs over time.”

The plan as proposed by PPL Electric Utilities would give residential and small business customers the option of making advance payments in 2008 and 2009 that would be used to offset a portion of their bills in 2010 and 2011. PPL Electric Utilities would pay 6 percent interest on the advance payments. Customers could withdraw from the program at any time and get full credit, including interest, for their advance payments.

He noted that all parties to the proceeding — including the PUC’s trial staff, the Office of Consumer Advocate, the Office of Small Business Advocate and organizations that represent customer groups — have agreed to the plan, and a PUC administrative law judge ruled that the phase-in option is in the public interest and should be approved.

PPL Electric Utilities, which does not own power plants that generate electricity, must buy electricity from other companies and, under state law, pass through the cost to customers with no markup or profit margin.

Electric generation costs have been increasing nationwide because of higher costs for fuel, materials and equipment; changing environmental regulations; and a shrinking difference between electricity use and available supply.

The 1.4 million customers of PPL Electric Utilities have been shielded from these higher costs by rate caps enacted in the late 1990s as part of Pennsylvania’s transition to electric competition.

“Higher costs following a lengthy period of price controls will not be easy for our customers,” DeCampli said. “The phase-in option is just one of the measures we have offered as a way to help customers.”

Other actions include:

• A plan already under way to obtain electricity for 2010 in advance and in stages to minimize the risk that the electricity will be purchased during a period of unusually high prices.
• Use of the company’s advanced metering technology that gives customers access to detailed information about their electricity use, helping them identify opportunities to use electricity wisely.
• An increase in funding for assistance programs that help low-income customers pay electric bills, weatherize their homes and reduce overdue balances on their accounts.
• An expansion of a pilot program under which volunteer customers can reduce their bills by shifting electricity use to mornings, evenings and weekends.

“We will continue to work with the PUC and with the Legislature on an energy policy for Pennsylvania that gives customers as many options as possible – including the opportunity to choose other companies to provide their electricity supply – for managing their electricity costs,” DeCampli said.

PPL Electric Utilities is a subsidiary of PPL Corporation (NYSE: PPL) that delivers electricity to 1.4 million customers in Pennsylvania and has consistently ranked among the best companies for customer service in the United States. More information is available at www.pplelectric.com.