Fumo calls for electric rate cap extension
Say what you will about Sen. Vince Fumo, D-Philadelphia. He has his faults, but he has a real interest in protecting telephone and now electric consumers from the large corporations which dominate these crucial industries in Pennsylvania and elsewhere.
While too many legislators think of utilities mainly as nice companies who donate money toward a community park or whose lobbyists treat them to a round of golf, Fumo sees them for what they are--profitable businesses who stand to get a lot more profitable if, in the case of electric companies, the rate caps currently protecting Pennsylvania citizens and businesses from huge rate increases are allowed to expire.
This is a fair issue for the General Assembly to address. Pennsylvania is facing an enormous wealth transfer after 2009 and 2010 from citizens and businesses large and small to a few large and already profitable electric utilities and their shareholders. PPL Corp. of Allentown, which serves the part of central Pennsylvania where I live, has reported to the SEC that it expects its profits to zoom by more than $800 million in 2010, the first year after its rate cap ends. Right now, PPL says customer bills will rise about 35 percent, but that number has been creeping upward. Because electricity is a vital commodity that fuels nearly everything in our modern economy, directly or indirectly, the increase will be hugely inflationary.
Fumo, accompanied by fellow Democrats Sen. Lisa M. Boscola, James Ferlo, and Sean Logan, called the utilities "greedy" and urged his fellow legislators to create a new system whereby electric rates could go up annually by the rate of inflation or 5 percent, whichever is less. Fumo posted a lot of good data on his website about the rate caps and how they came about. If you have PowerPoint installed on your computer, the slide presentation is particularly good.
Unfortunately, the rate cap issue is one that is hard to quickly explain to the public, and even moreso to the average legislator. You can't explain why rate caps were necessary and why they ought to continue, at least with any degree of accuracy, in a quick soundbite. If you try to explain why the structure of the wholesale power market is unfair to consumers and real competition won't ever develop, your listeners will be nodding off after about 20 seconds, before you even get to the fascinating and crucial issue of locational marginal pricing. Quick! The NoDoz!
On the other hand, it is an easy issue to oversimplify. Power industry spokesmen are fond of fitting their arguments into a conservative "government is dumb" mold that probably resonates with Limbaugh types. ''Government" capped electric rates since 1996. Of course prices are going to go up you foolish consumers! Yes, and they leave out the part about how in return for the rate caps the utilities collected billions from their ratepayers for investments like nuclear plants that supposedly would be uneconomical under competition, but which in fact are cash cows now.
Fumo and his allies won't likely be able to put through their permanent rate cap--more accurate a limited rate increase--plan unless the Democrats recapture the state Senate this fall. And maybe not even then. I've found over the years that on utility issues, party labels don't mean as much as they do on other things.