Utility rate caps established almost a dozen years ago in Pennsylvania are coming off, and that means electric bills of residential customers who can't find cheaper power elsewhere will be increasing as of the first of the year.

Major utilities in Pennsylvania agreed to cap their rates at 1996 levels because the cost of delivering electricity then was higher than the national average. The theory behind the rate caps was that they would spur competition and bring lower prices. They didn't and now fuel costs have risen to the point that the caps must come off. The first residential customers to loose the caps will be those served by Pennsylvania Power and Light (PPL).

Pennsylvania consumer advocate, Sonny Popowski, says it will mean about a 30-percent increase in residential rates as they adjust to the market after all these years.

"Let's say you're a customer that's paying a hundred dollars a month for electricity. Your bill would go up to about a hundred thirty dollars a month."

Rate caps had eased the concerns of utilities that were worried about huge profit loss from a sudden onslaught of competition, says Popowsky, but ultimately, consumers were the focus.

"Consumer advocates like myself were concerned that, if it went to competition right away, and we allowed the utilities to charge anything they wanted, what would happen if competition didn't materialize?"

PPL customers do have the right to shop for their own independent electricity provider as a way to save money, but those choices are few right now. Customers of Allegheny Power and PECO have another year before the caps are removed for them. Some electric utilities are giving customers the opportunity to prepay the increased cost now and earn six percent on the money. About 100,000 PPL customers have taken advantage of that phased-in rate increase offer.

Few believe there would be a return to rate caps in the future; instead expecting the market will dictate what consumers pay for electricity.

Tom Joseph, Public News Service - PA