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Pa. attorney general probing spike in electric bills

| Wednesday, Feb. 26, 2014, 1:30 p.m.
Guy Wathen | Tribune-Review
Vicki Rizzo, owner of Vicki's Place in Port Vue, recently received the highest electric bill she has ever had in 20 years of business.
Guy Wathen | Tribune-Review
Vicki Rizzo. owner of Vicki's Place in Port Vue, recently received the highest electric bill she has ever had in 20 years of business.

State prosecutors are reviewing complaints from consumers who experienced dramatic increases in their electric bills this winter to determine whether they were overcharged or were victims of deceptive marketing by power companies.

The decision by the state Attorney General's Office on Wednesday followed hundreds of complaints by consumers about bills that doubled or tripled as the frigid winter pushed up power demand and prices. The Public Utility Commission and state Office of Consumer Advocate are investigating.

Many of the complaints center around consumers who recently switched to variable-rate plans that fluctuate from month to month based on wholesale electricity prices, and the state agencies want to verify whether those adjustments were in line with what was advertised and with the law.

“These spikes in the price of electricity are alarming and have put many consumers, especially the poor and elderly, in a dire situation,” Attorney General Kathleen Kane said. “We are looking at these price increases and will be prepared to take action to protect affected consumers.”

Prosecutors are asking consumers to send in the contracts, advertisements and disclosure statements they got from power suppliers.

There have been 2,000 complaints to the PUC as of Tuesday, an amount that's nearly tripled in less than two weeks. The commission got about 250 calls a day on Monday and Tuesday, PUC spokeswoman Jennifer Kocher said. The Attorney General's Office and the Office of Consumer Advocate have also received hundreds of calls.

Most electric consumers in the state ­— the 3.4 million who still buy from utility companies — are likely unaffected because their rates are frozen for long periods and regulated by the commission. There are 2.2 million customers who buy service from deregulated suppliers, and it's an unknown number of them who have variable-rate plans and could be affected.

The PUC does not keep a tally of how many have variable-rate plans. Some people signed up directly for rates that could go up and down based on the market's whims. Others were switched automatically when their fixed-rate deals expired.

Electricity prices spiked as the regional power grid saw record winter demand from people turning up the heat and staying indoors during extreme cold that hit the area during the past seven weeks. Variable-rate plans jumped as high as 38 cents per kilowatt hour compared with 8 cents for people who stuck with their default utility company, according to the Office of Consumer Advocate.

Gov. Tom Corbett declared a state of emergency on Feb. 5. After that, if any of the suppliers increased their prices even more than the increase of their costs, then that would be considered illegal price gouging under the law, according to the Attorney General's Office.

Victoria C. Rizzo, whose electric bill for her Port Vue bar went from $400 in December to $931.49 in January, said she plans to file complaints with the state soon.

“We can't do this alone without the elected officials doing their part. Me, the little consumer, I have nothing to say but a boo hoo and a cry,” she said. “I hope our Attorney General will do her job and get us a refund because this was nothing but a fraud and a scam. They weren't truthful and they weren't honest when they called me 9,000 times.”

The Retail Energy Supply Association, which represents competitive suppliers, said Wednesday it would support efforts to bolster consumer education and protection. Some of its member companies are offering to credit bills, to waive early termination fees and to enroll customers in budget billing plans to help them manage the recent price spikes, said Richard Hudson, the group's Pennsylvania state chairman.

“The attorney general is rightfully concerned with the recent price spikes,” Hudson said in an emailed statement. “The prolonged cold weather affecting much of the country this winter has had extraordinary price impacts in wholesale natural gas and electricity markets, and those impacts are being felt by both retail suppliers and their customers.”

The Attorney General could pursue a criminal investigation, but its most likely focus is consumer protection, spokesman Joe Peters said. It could mediate disputes and seek refunds for customers, or file a civil action like a lawsuit or a challenge in front of the Public Utility Commission.

What it does, and what the other agencies do, will be determined by what they find from reviewing the documents from consumers, they said. If any of the suppliers violated state regulations, the PUC could impose its own fines and revoke licenses. Demanding refunds would be harder, Kocher said.

The issue highlights some problems with the's state's ongoing push for people to shop around for electricity, said Christina Simeone, director of the PennFuture Energy Center.

There are marketers who have used “predatory” efforts to lure customers, but, without fixing that problem, some state lawmakers are forging ahead with a bill that would force any of the remaining 3.4 million utility customers who haven't selected a supplier to shop for electricity, she said.

“There's so much more needed from the education standpoint to really make consumers aware of what they're shopping for and these different terms,” she said. “So, to me, the education piece should be aggressively pursued before there's any type of legislation to force people to shop.”

Timothy Puko is a Trib Total Media staff writer. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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