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Municipal utility shakeup goes too far in current form

As Pennsylvania embarks on a budget cycle that is laser-focused on reform and spending cuts, it seems nothing — not even utility companies — is safe from the idea that wholesale changes might help dig state and local government out of fiscal holes.

Legislation introduced by state Rep. Aaron Bernstine, R-10, would change the way dozens of Pennsylvania boroughs, including Zelienople, run their municipally-owned electric utilities. The bill has become a point of sharp contention for many municipalities, who have warned that it could lead to service cuts or tax hikes.

Bernstine calls the bill “good, common sense legislation,” and it’s hard to argue with him on the broad strokes — though he goes too far in claiming that all boroughs which own and run their own electric companies are using the current system to “inappropriately gouge” residents.

That’s an over-the-top claim which is just not backed up by facts and figures, and Bernstine would be better served by moderating his critique of the system — which last came under fire in 2011 after revelations that residents in Middletown, Pa., were being gouged by the municipal electric company in an effort to close a $3 million budget gap for the borough.

Is Middletown the rule, or the exception that proves most borough-run electric utilities are functioning fairly? Because so many serve smaller, rural communities, it’s difficult to say for sure. Some communities — Ellwood City, Perkasie, Mont Alto — have publicly complained in the past about high electric rates or large rate hikes. But there’s little evidence that the Middletown model (a borough using electricity rates to subsidize a large portion of its budget) is pervasive.

Still, Bernstine is correct that residents in these communities deserve more protection under the law. The question is, what’s the best way of achieving that goal?

And the rub is this: there’s really no good solution. It all comes down to the quality of the governance around the utility companies themselves. Whether you adopt an investor-owned, regulated utility model like the one overseen by the state Public Utility Commission (PUC), or the publicly-owned monopoly model Bernstine finds so much fault with, that won’t change.

In the PUC model, taxpayers are too distracted and busy to care about who gets appointed to the commission that regulates the utilities, so the commission skews in favor of the companies’ interests rather than the public, which sometimes results in higher-than-desirable rates.

In the municipal model, voters aren’t informed or interested about the specifics of electrical utility management, the enterprise becomes a political tool, and customers, who lack a competitive market, are sometimes saddled with higher bills.

We’re not convinced that one is any better than the other. So the question should come down to basic institutional quality. If municipal electric utilities are providing quality service and reasonable prices to the people in a community, there’s no reason for the state to try and reinvent the wheel.

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