Pennsylvania farms and businesses need to aggressively explore ways to cut electrical energy demands – before rates begin skyrocketing. The 10-year-old state-mandated caps on electric rates begin expiring in 2010. Utility companies are already sending out notices implying future rate hikes.
"A crisis is coming," Pennsylvania Governor Ed Rendell testified this week to members of the House Environmental Resources and Energy Committee. "Just as we have seen price spikes for gasoline and winter heating fuels, a price spike of equal or greater magnitude is coming for electricity."
That price spike is coming – unless the state government elects to keep prices in check. "If rate caps expire, prices could go up by 30, 50, maybe even 60% or more in some cases. For a household spending $1,200 per year for electricity, this could add as much as $400 or $500 per year depending on where you live," says Rendell.
Energy-intensive ag impacted more
Businesses that trigger "peak load" rates will be most impacted. That's typically the 100 hottest hours of the year when demand and electric rates are highest. These 100 hours account for 1% of all hours in a year, but 20% of what customers pay a year.
As reported in American Agriculturist magazine, stand-by power generated by diesel- or methane-powered engines are increasingly being used on farms during such peak-use periods to avoid triggering peak-use rates. In a growing number of Northeast states, tax credits and/or cost-sharing programs help cover the cost of energy-conserving measures, ranging from lighting systems to geothermal heat pump systems and solar and wind energy. Help is available for installing energy-efficient windows, doors and insulation.
"Conservation shrinks the energy bill of the person or business that conserves, but it also reduces total demand in the wholesale market, which keeps price spikes to a minimum," says Rendell.
Rendell also pushed the state legislature to approve a bill that would require utilities to provide service to customers at the lowest reasonable rate, and to procure power through a mix of short- and long-term contracts and spot market purchases.
He also said the Public Utility Commission should immediately adopt measures to phase in any rate increases over three years. The PUC has traditionally phased in double-digit increases.
"There must be a phased in approach to any major rate increases so that consumers don't have to deal with a huge jump in prices in one year. Given the level of utility company profits, it makes sense that these companies should bear the greatest share of the cost of any phase in," he says. Otherwise, he would favor extending current rate caps.