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PUC leaves some variable-rate electric customers out in the cold

Nearly everyone in Western Pennsylvania has felt a jolt of sticker shock when opening their January and February utility bills for heat. Multiple visits by the Polar Vortex has produced extreme cold for much of the winter. But for some people, the heating bill shock was worse than their neighbors’ — and it looks like a “bait and switch” scheme or uninformed consumers who switched to a new power supplier for a low, teaser rate.

Last Sunday’s Butler Eagle featured the story of a Center Township couple, John and Jennifer Gilliland, who saw their electric bill jump to $1,300 in January from $427 for the prior month. Rather than cold temperatures causing the tripling of their bill, the cause was found in the couple’s switch to IDT Energy and that company’s variable rate program. The rate charged by IDT jumped to 23.16 cents per kilowatt hour from 6.94 cents.

Not surprisingly, the Gillilands plan to switch power companies, but they will be facing another IDT bill before that can happen. In the meantime, they are keeping a sharp eye on their energy usage.

The Gillilands are not alone in being shocked, and angered, by a sudden and dramatic increase in their electric bill. Hundreds of consumers across Pennsylvania have contacted the state attorney general’s office with similar complaints about variable-rate deals.

The Pennsylvania Public Utility Commission says it has received about 750 complaints about variable-rate plans and skyrocketing bills.

When the state’s electricity market was opened up to more energy supplier competition several years ago to promote competition and possibly lower prices, state lawmakers and state regulators should have anticipated that homeowners would be approached with aggressive marketing campaigns and attractive teaser rates. State officials should have built in more protections for consumers, such as requiring power-generation companies to send a letter a month in advance of any rate increase exceeding 10 percent. As it now stands, consumers like the Gillilands are stuck for one or two months paying overly expensive electrical bills.

Some might say this is a matter of “buyer beware” and certainly consumers need to educate themselves about the competitive electric marketplace. But state regulators should have done more.

The PUC is hearing lots of complaints and says it will look into the skyrocketing rates and review the marketing and contracts of the companies generating the most complaints.

Many experts advise consumers to avoid variable rate contract offers from power suppliers to avoid these kind of shocks on electricity bills. This looks like a bait-and-switch scheme, but it’s likely few read all of the fine print or understand the risks of a variable-rate deal. So, it’s buyers beware.

But in the still-regulated electricity market, state lawmakers and regulators could have and should have done more to protect consumers from skyrocketing bills caused by tripling rates, not the polar vortex.

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