Spikes in electric bills subject of special hearing

By on March 12, 2014
State Representative Steve Mentzer

State Representative Steve Mentzer

Within the past few weeks, my office has received numerous calls from residents about recent increases in their electric bills. Some bills were between 300 percent and 400 percent higher than normal. In most cases, these recent increases have been brought on by a variable rate charged by the electric generation supplier.

Because this issue is prevalent in households across Pennsylvania, the House Consumer Affairs Committee will be looking into this matter at a special public hearing on Thursday, March 20, in Harrisburg. This hearing will be streamed live at pahousegop.com, and archived for later viewing. From testimony gathered at that hearing, the committee will determine if additional consumer education is necessary.

In addition, legislation was recently introduced in the House to require easy-to-read and understandable information to be provided in all supplier contracts. The bill would also place a cap on the amount a rate may change under a variable rate contract, prohibit cancellation and early termination fees for variable rate contracts, require the posting of current and historic rates online and reduce the amount of time it takes to switch electric generation suppliers. I am a co-sponsor of this bill. In the meantime, here’s a short explanation of why this is happening:

Competitive electric generation suppliers are not public utilities and their rates are not subject to government regulation. These suppliers operate in a competitive environment. The terms and conditions of service offered by a competitive supplier should be contained in the contracts it offers to customers.

If you sign up for service from a competitive generation supplier, it is very important to carefully review the terms and conditions of service, which should contain important information regarding the type of rate (fixed or variable), how the rate is determined, if the rate includes taxes and fees, and if the contract is subject to early termination or cancellation fees.

Under fixed rate contracts, consumers are charged the same price for electric generation for the duration of their service contract with a competitive generation supplier. However, variable rate contracts are generally subject to a promotional rate period, followed by fluctuating monthly rates based on wholesale electric prices. I cannot stress enough that variable rates change based on wholesale market conditions. While these types of contracts may work for some consumers, anyone considering a variable rate contract for electric generation should be aware that the rates are market based, and that dramatic rate increases may occur. Market prices for electric generation are constantly in flux – and greater demand for energy, as evidenced by our cold winter – is one of those factors.

Unfortunately, consumers with variable rate contracts are impacted by these record-breaking wholesale prices, and have seen or will see increases in their monthly bills as a result.

Customers on a variable rate plan are encouraged to contact their supplier on a regular basis to find out the rate the supplier is charging for that day or month. Customers should also be aware of any early termination or cancellation fees associated with their contracts. If switching to another supplier, please be aware that it takes at least one or two billing cycles for the switch to be completed. During this time, you will continue to be a customer of the “old” supplier.

I will be attending the special hearing conducted by the House Consumer Affairs Committee, as it is important that we understand how to deal with this issue moving forward.

For more information, including tips on how to change your provider, visit puc.pa.gov.

 

Steven C. Mentzer, of LancasterCounty, was elected to represent the citizens of the 97th Legislative District in the Pennsylvania House of Representatives. Before his election to office, Mentzer served as the treasurer of ManheimTownship. He has also been heavily involved in a variety of humanitarian efforts, both locally and globally, since 2006. Visit repmentzer.com.

 

 

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