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New Duquesne Light plan could mean lower rates for many

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Wednesday, Feb. 6, 2013, 12:01 a.m.
 

Duquesne Light Co. will change the way it buys and sells power it supplies to customers, starting this summer — a move that state regulators say could lower bills by as much as $30 a month.

The Downtown-based company obtained state Public Utility Commission approval for a two-year plan to provide power to customers who haven't signed up with one of 29 competing power suppliers.

Unlike the utility's previous plans that set rates for as long as three years into the future, this one calls for Duquesne Light to adjust prices every six months and to buy power just a year in advance. Longer-term contracts included more costs that were passed on to customers.

The plan has two goals: Better rates for Duquesne Light customers, reflecting lower market prices for electricity; and motivating more comparison “shopping” by customers, even though 229,000, or 43.5 percent of the utility's residential customers buy their power from competitors, the highest level statewide. Duquesne Light serves most of Allegheny and Beaver counties.

“Right now in the Duquesne territory, there's a 3-cent difference” per kilowatt hour of electricity between the utility's rate and that of its lowest-priced competitors, PUC spokeswoman Jennifer Kocher said.

Duquesne Light's rate for so-called “default” service is 9.89 cents per kilowatt hour. Under default service a customer pays Duquesne for both electricity and delivery.

The gap translates to around $30 a month more on a monthly bill for an average customer using 700 kilowatt hours, she said. Duquesne Light and other utilities don't make a profit on the electricity supply portion of customers' bills, only on the delivery portion.

One competing power supplier, Downtown-based Direct Energy, offers a 7.59 cent price in Duquesne Light's territory.

Duquesne Light spokesman Joseph Vallarian said the new plan that stretches from June 1, 2013, to May 31, 2015, will provide a bridge to when the PUC is expected to set new rules for utilities' default service. Kocher said an investigation of the retail electricity market statewide is in its final stages.

Two new efforts could inspire more customers to switch:

• An “opt-in” offer of a 5 percent discount from Duquesne Light's rate at that time, plus a $50 cash bonus if they stay with the alternate supplier for four months. This would be followed by an eight-month fixed price from competitors who participate.

• A 7 percent discount to the utility's price for a year.

Similar programs are rolling out in each utility territory statewide, as the PUC moves to beef up competition, said Ron Cerniglia, Direct Energy's director of government and regulatory affairs, Downtown.

Some details of Duquesne Light's plan are still being determined, Vallarian said.

Tanya J. McCloskey, the state's acting consumer advocate, said the company's latest plan is a good balance that provides some price stability for customers while adjusting for changes in the power market.

With new incentives to switch, “They can look at the different offers and compare them to a long-term price. It's not something that three months later, they have to look again,” she said. Most utilities statewide have moved to adjusting rates quarterly.

Compared to Duquesne Light's last 29-month plan that froze prices, “Certainly 6 months (between rate adjustments) is better than what they had,” said Direct Energy's Cerniglia. “We think customers should see real, market price signals. That way, they're allowed to make better decisions.”

Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or kleonard@tribweb.com.

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