Get ready for a shock

I'm sure everyone has heard by now that electricity rates in Pennsylvania will skyrocket after state-imposed caps expired in 2010.

It's a complicated issue that goes back to the idiotic plan to "deregulate" public utilities.

There's been a lot of "sky is falling" predictions by politicians in Harrisburg about what's going to happen when the rate caps expire, but nothing has been done so far to head off the crisis. After all, this is Harrisburg, the same place where politicians have been "working" on property tax reform for the past 30-40 years.

State Sen. Lisa M. Boscola, a Democrat who represents the 18th Senate District in Lehigh and Northampton counties, has been one of the most vocal lawmakers on the rate caps issues.

In an era of $4 per gallon gasoline, consumers haven't begun to feel the pain of what's coming when electric companies will begin charging higher rates for their product.

Boscola called it the "real energy crisis" in a recent op-ed published in many Pennsylvania newspapers.

In case you missed it, here are highlights of Boscola's column:

"In less than 18 months, rate caps that date back to 1996 will finally expire for the five largest energy companies that serve you and I and 85 percent of Pennsylvania's electric customers. Electric deregulation was a bold attempt to turn an old statewide monopoly of public utility companies into a brand new, competitive marketplace. Congress and the Federal Energy Regulatory Commission (FERC) paved the way for 20 states, including Pennsylvania, to deregulate their energy industries. Trucking and airline companies had already taken off the chains of government control.

But deregulation didn't live up to its promises of real competition, more choices, and cheaper electricity. Not in Maryland, Connecticut, Kansas, Texas, Ohio, Virginia, Illinois or in any other deregulated state in the country. Once rate caps expired, electric customers in each of those states saw their monthly bills increase by as much as 85 percent. That's not just "my opinion," that's what actually happened. The facts.

There's a big difference between "need and greed."

Any company that made a 51 percent profit last year is not being "forced" to either raise the price of its product by 50 percent or else go bankrupt.

Power companies are making record profits, higher than at any other time in company history for some of them — even while they kept their rates capped. They also ran to the bank with $12 billion from Pennsylvania ratepayers to erase their public debt (stranded costs) and become more profitable. So far, consumers have received nothing in return except empty promises and endless excuses. In 1996, deregulation promised consumers more choices, more competition and lower monthly electric bills. But in 2010 all we will see are record rate increases and record corporate profits.

How will your family budget cover your electric bill when it goes up from $250 a month to $400 a month?

How will small businesses afford to stay in business when the cost of just "turning on the lights" becomes twice as expensive?

And how many industrial plants will close and good jobs disappear when higher energy costs put them in the red?

As if that's not bad enough, don't forget about the "ripple effect." The same reason higher gasoline prices led to higher grocery bills. Your local school district will have to raise property taxes to be able to keep copiers working, computers running and the lights on in every classroom. Hospitals will be forced to raise the price of providing medical care. Even closer to home, your local borough or municipality will be forced to raise taxes just to keep the streetlights on and to provide the daily services you rely on.

Boscola says the state must step in to prevent "the economic train wreck that lies ahead."

Here's her 4-point plan:

First, the Pennsylvania Legislature must act before rate caps begin coming off in 2010. That's an important lesson we can learn from observing what happened when Legislatures in our neighboring states failed to see a crisis coming until it was "too late." Lawmakers in Maryland and Texas are still trying to deal with the consequences of deregulation years later. Trying to clean up the mess after power companies are allowed to double their rates and triple their profits is like waiting until after a hurricane rips through your house to put plywood over your windows. If we cannot enact meaningful legislation by the end of next year, we must extend the current rate caps to prevent homeowners (especially those on fixed incomes), small businesses and industrial customers from being thrown to the wolves and at the mercy of so-called "market" pricing.

Second, provide real incentives for out-of-state "merchant generators" to compete for electric customers on the basis of price and innovative services. Today there is no "competitive market," in Pennsylvania. Just sitting back and waiting for "real" competition to magically appear is a foolproof recipe for making sure that it will never materialize. There are basic, fundamental conditions that must exist first. As long as incumbent power companies can continue to manipulate energy "auctions" and take advantage of PJM's arbitrary pricing scheme, they will continue to inflate wholesale electric prices and "legally" steal billions of dollars from their customers.

Third, return excess company profits to customers as a "deregulation dividend." Lawmakers in Illinois required power companies to return $1 billion to their customers when rate caps expired there — which the companies did. When power companies can afford to do that (without going bankrupt), it makes you wonder whether they really "needed" to increase rates so much in the first place.

Finally, soften the blow of higher electric rates by gradually phasing them in over five years. At a time when our economy is suffering through a recession and working families are struggling to pay higher gasoline and grocery bills (and still make their monthly mortgage payment), no one can honestly expect consumers to simply "tighten their belts" and be able to pay an extra $200 on top of their monthly electric bill. This also applies to commercial and industrial customers that are trying to stay afloat during this economic downturn.

To be sure, there is much more we can — and should — do to fundamentally address the long-term problems posed by electric deregulation. But our first priority should be to protect ratepayers from the "real" energy crisis that faces us in 2010.

Keep up with news about the pending crisis at Boscola's Web site.

More importantly, contact your state representative and your state senator and demand that they make this issue a priority. This is an election year. All the members of the state House and half the members of the state Senate are seeking re-election. Make sure you know where your lawmaker stands and find out what they plan to do about skyrocketing electricity rates before you send them back to Harrisburg.