Still time for customers to sign up

So far, more than 110,000 PPL Electric Utilities customers have opted to adjust gradually to higher electricity prices in 2010 by choosing the company’s phase-in payment option and stretching out the expected increase over several years.

Customers who voluntarily choose the phase-in option make advance payments monthly through the remainder of 2008 and 2009. Those payments, plus 6 percent interest paid by PPL Electric Utilities, will be used to offset a portion of their bills in 2010 and 2011.

“This option will help customers manage the higher costs that are expected when more than a decade of generation rate caps ends,” said David G. DeCampli, president of PPL Electric Utilities.

“We know higher prices will not be easy for customers and we’re encouraged by the number of people who have enrolled,” he said. “We want others to know that it’s not too late to benefit from this option.”

Customers can enroll at www.pplelectric.com, by calling toll-free 1-866-597-2010, or by returning the tear-off enrollment form and postage-paid reply card that they received in the mail.

DeCampli said electricity prices have been going up throughout the United States during the period when generation supply rates for Pennsylvania utilities have been capped. These higher prices reflect the fact that electricity use has increased faster than new generation has been built. At the same time, costs for fuel and materials have increased sharply over the past decade.

Without the cap, generation rates would have gone up gradually over the past decade. 

DeCampli said PPL Electric Utilities began working two years ago to inform customers about the changes ahead, to promote energy efficiency as a way for customers to offset higher prices, to develop new rate options like time-of-use rates that will give customers greater control over what they spend on electricity, and to offer choices like phase-in to help them manage higher costs.

By enrolling in the phase-in option, an average residential customer using 1,000 kilowatt hours a month will see increases in the range of 5 percent to 8 percent a year from 2008 to 2012, rather than a one-time increase when the rate cap expires in 2010.

Customers may withdraw from the program at any time and get full credit, including interest, for their advance payments. The Pennsylvania Public Utility Commission has approved the phase-in option.

Because of changes in Pennsylvania’s electric utility industry, PPL Electric Utilities does not own power plants that generate electricity. It must buy electricity from other companies and, under state law, pass through the cost to customers without profit. 

“We already have purchased two-thirds of the electricity we need for 2010 to replace an expiring power supply contract,” DeCampli said. “We have contracts with several suppliers at market prices, which are higher than the existing contract we have under rates that are capped by the state.”

The PUC has approved the results of those purchases. The company will obtain the remaining one-third of the electricity it needs for 2010 next spring and fall.

If the average prices for the remaining purchases match the prices approved so far, the bill for a residential customer using 1,000 kilowatt-hours would increase by 36.1 percent in 2010, or about $38.48 per month.

“If competitive suppliers are offering lower prices, customers will be able to choose another supplier and reduce their electric bills,” DeCampli said. “The electricity we are purchasing is for customers who do not have another supplier.”  Participation in the phase-in program will not affect a customer’s right to shop for generation supply.  

Customers of PPL Electric Utilities have few competitive options for electricity supply today because the company’s generation charge for default service remains subject to a rate cap that is based on 1997 costs. Competing suppliers simply cannot sell electricity at prices below that level.

To help low-income customers, PPL Electric Utilities offers several assistance programs. The company increased funding for those programs by 38 percent this year, and expects to spend $30 million in 2008 to help low-income customers pay heating bills, make home improvements to reduce electricity use and enter into special payment plans.

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.