Rep. Phyllis Mundy
Rep. Eddie Day Pashinski
Rep. Mike Carroll
June 28, 2007
PPL testimony 120th-121st-118th
Good evening. My name is Rich Pronesti and I am here tonight to deliver testimony on behalf of State Representatives Phyllis Mundy, Eddie Day Pashinski, and Mike Carroll. We represent the 120th, 121st, and the 118th legislative districts. The members apologize for their absence, as the legislature is engaged in voting session and budget deliberations as we speak. We in Luzerne County appreciate your holding this hearing in Wilkes-Barre, allowing our citizens to comment on this rate increase proposal in our own community.
We are opposed to the rate hike proposed by PPL for one very simple reason: the burden is placed too heavily on average citizens who went through this just two short years ago.
This time around, PPL says they need to raise rates to produce additional annual operating revenues of $83.6 million. Of the $83.6 million, $78 million will be paid by residential customers – that’s 93% of the total increase.
By contrast, a typical commercial customer faces only a 0.5% increase – while a typical industrial customer will actually be given a 0.3% decrease. Commercial and industrial customers have some ability to recover these costs through the price of their products. But where do retired citizens, residential customers, who thought they had saved and provided for their retirement find the additional money every month to pay these significant increases?
The common Residential Service class customer faces an average overall increase of 6.8% - which is an approximate 20% increase in residential distribution rates. An RS customer, using 1000 Kilowatt hours per month, will see their bill go up $6.62 a month. PPL is also proposing to raise their monthly Customer Charge for residential Service under Rate Schedule RS from $7.96 to $10.00.
As I referenced earlier, residential customers went through this two years ago. In their 2004 request, PPL asked for a $164.4 million increase in retail distribution operating revenues, yet that increase would have raised the average RS customer’s bill by just 9.67% or $7.58 monthly.
This means that PPL’s 2004 request was twice as large as the current request, but the monthly increase for Residential Service customers was about the same as what they’re proposing now. It doesn’t make sense… if they’re asking for half as much as they did last time, why is the increased monthly burden on residential customers the same as it was two years ago?
The big difference last time was that commercial and industrial customers also had to pay more. It makes sense – if you need to raise rates, raise rates for all classes, so that the financial burden can be shared.
But, it’s not surprising that PPL went this route. In the 2005 increase, PPL put forth that no residential customer would face more than a 10% increase. That ensured the increase would, as said earlier, be spread more evenly. Big business, industry, and the small business advocate filed suit in Commonwealth Court over their share of the increase. Last year, the Court, in what we consider a dreadful decision, ruled that state regulators must set “nondiscriminatory reasonable rates.” So the PUC had little choice but to agree to a settlement with PPL which, as of August 1, raises residential rates by nearly 4%, while lowering commercial and industrial rates by as much as 5%!
That’s right – residential customers are facing a double increase, a “double whammy.” A hit in August, and then another, should this rate increase be approved. Not commercial or industrial customers, who will have their tiny proposed increase eliminated, and their rates actually reduced, by this settlement. And that’s why regular folks are bearing the brunt.
Besides taking more of the money from residential customers instead of commercial and industrial customers, PPL wants to put nearly $4 million of this rate increase, over 3 years, into its brand new Sustainable Development Program (SDP). PPL is a public utility… not an economic development company. They should not charge one penny more than they absolutely need to. Pennsylvanians already fund economic development through a variety of state programs – paid for by their tax dollars. They shouldn’t be asked to fund economic development through their electric bills as well, and PPL should not be given the power or authority to do so.
PPL claims a rate increase is needed to handle costs. Costs are the same for all electric providers. One might ask: why haven’t any other companies tried to raise their rates by $248 million over 3 years?
We oppose this rate increase and urge the PUC to consider denying or at least dramatically reducing and redistributing the amount more fairly over the various consumer classes. We thank you for your consideration.