PUC: 'Bad actors' hammered Pa. residents with massive rate increases

The chairman of the Pennsylvania Public Utility Commission wants to create a "safe harbor" for customers whose bank accounts were sunk by variable electric rates, which skyrocketed during the bone-chilling winter.

Chairman Robert Powelson spoke out against the "bad actors" who hammered residents with massive rate increases in January. The commission has been inundated with more than 12,000 phone calls and more than 4,800 complaints, Powelson said Tuesday.

"It has also raised an awareness for this commission that if we find unscrupulous actors in the marketplace, that we have to now demonstrate zero tolerance for suppliers that have potentially hoodwinked customers, slammed customers, misinformed customers," Powelson said.

Testifying before the state Senate's Consumer Protection and Professional Licensure Committee, Powelson said notifications must be improved so customers can know about coming price changes. Electricity retailers also need to invest more in consumer education, he said.

In case of an abnormally hot summer, officials need to act quickly to shorten the waiting period for customers to switch electricity retailers, Powelson said. Pennsylvanians must now wait between 16 and 40 days to swap companies, and the commission this week could shorten that to three days so that customers can avoid getting trapped in another expensive variable-rate billing cycle, he said.

Powelson suggested there's a chance the bad actors "might not be in this marketplace when it's all said and done." He brought up the possibility of license revocations for those already facing scrutiny.

"That's a harsh message to send, but I think in fairness to customers and in fairness to the good actors in the market, this will create a cleansing of the market," he said.

The issue of variable rates has already drawn an inquiry from Attorney General Kathleen Kane, and last month the Pennsylvania Office of Consumer Advocate indicated it had been swamped with complaints. In some cases, electric bills have topped $1,000.

"There's not a single senator here that has not been contacted by friends and neighbors desperate about the size of their electric bill and how they would be able to pay for it," said Republican state Sen. Tommy Tomlinson, the chairman of the committee.

Lawmakers have definitely taken notice.

State Sen. John Gordner, R-Columbia, has proposed banning variable rates. State Sen. Lisa Boscola, D-Northampton, is pushing an enhancement of notification requirements and shortening the waiting period that must pass before people can swap retail electric suppliers.

Boscola said she's worried suppliers have visited churches and senior centers, where they tried to get older residents to switch to variable rates by selling them a "bill of goods" or enticing them with a "teaser rate."

While some electricity retailers said they're trying to work with customers to mitigate the effects of the high bills, Tanya McCloskey, the acting consumer advocate, said she doesn't believe it's an instance in which customers simply gambled on a risky rate and lost.

Instead, she said, some disclosures were so vague they were almost meaningless, and in some cases customers didn't learn of the high rates until after they were charged — the equivalent of filling up a vehicle with gas and learning later the price was higher than originally thought, she said.

"An electric bill has a major impact on a customer's life, no matter the customer's income level," McCloskey said. "When that bill soars to an unaffordable level, it can be a life-changing event."

Andrew Staub is a reporter for PA Independent and can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.