Electric costs apt to soar in 2011

So maybe you've gotten used to paying $4 a gallon for gasoline.

You've tightened your belt. Cut back on expenses. But still fill up the car to drive down to the Shore every now and then.

But come Jan. 1, 2011, high gasoline bills won't be the only high-cost energy headache for Pennsylvania consumers.

A statewide cap on electricity rates expires Dec. 31, 2010. And in 2011, energy bills are likely to explode.

"The era of cheap energy is over - the age of expensive energy has arrived," Liz Robinson, executive director of the Energy Coordinating Agency, a nonprofit group here in Philadelphia, said yesterday.

"Unfortunately, decades of cheap energy have lulled most Americans into complacency. We are very ill-prepared for the crisis we now face."

Robinson, along with Gov. Rendell, Mayor Nutter, City Councilman Curtis Jones and others worried about high energy costs testified at a state House of Representatives committee hearing yesterday. The session - held in Philadelphia City Council Chambers - was held to push for passage of a bill that would require utilities to pay for energy-conservation efforts.

According to one of the groups at the Environmental Resources and Energy Committee hearing, Peco Energy, the state's largest utility, has already announced an anticipated 20 percent increase in electric-generation charges when the rate caps end in 2010.

"I'm here to let everyone in Pennsylvania know that a crisis is coming," Rendell said to committee members, kicking off the two-hour hearing.

"Just as we have seen price spikes for gasoline and winter heating fuels like natural gas and heating oil, a price spike of equal or greater magnitude is coming for electricity."

When the price caps expire, Rendell said, electricity rates could rise by as much as 30 percent and "maybe even 50 percent or more in some cases." For a household spending about $1,200 a year now for electricity, the tab could be boosted by as much as $400 or $500 more, the governor said.

Nutter also spoke on behalf of the energy legislation now being considered by both the state House and Senate. He said that it would allow "smart meters" so that customers could "shift their use to lower-cost times of electricity generation."

Nutter said that he favored "a system of time-of-day pricing presented through smart meters and a provision for returning surplus power to the grid through net meters," which he called " terrific ways to educate and engage consumers."

Robinson, of the Energy Coordinating Agency, said that it is important for consumers to learn that "the energy prices we see today are not a temporary reaction to some short-term reduction in supply," as happened in the 1970s.

Furthermore, in an interview, Robinson said that other utility rates are likely to go higher as well because they, too, will face higher electricity bills to produce the water or natural gas they supply.

Cathy Engel, a spokeswoman for Peco, said that the utility supports the idea of teaching consumers how to use electricity more efficiently.

She said that the 20 percent boost in electric costs is the difference between what Peco customers have been paying for the past 10 years while there was a cap on rates and the real market value of the costs Peco must pay to purchase electrical power.

Engel said that Peco wants to work with Rendell and the Legislature to look for a more competitive way to buy the power it resells to customers, and that it is willing to consider phasing in any rate hikes so that consumers aren't hit with a big jolt of an increase all at once. *