The New Year brings higher electricity bills starting today, as electricity customers pay for damage from 2011 storms and other improvements, including poles, wires and substations that deliver power.
The state Public Utility Commission entered an order last week that made official PPL's increase in its customer charges and a modest decrease in distribution rates. Combined, the changes result in a 3 percent increase in the monthly bill. For a home using 1,000 kilowatt-hours of electricity, a bill will increase from $117.63 to $121.19.
PPL's latest rate case underscores how the utility is shifting the growing costs of maintaining, upgrading and repairing the electrical delivery system from the distribution rate, based on usage, to the flat rate customer charge.
The PPL customer charge will jump 62 percent from $8.75 per month to $14.09 per month. The flat customer charge is often considered regressive, because it does not account for usage and does not encourage conservation or energy efficiency.
The distribution rate will go down a fraction of a cent per kilowatt hour, from 2.55 cents to 2.51 cents.
"It makes sense to move more of our monthly charges to a fixed basis to more closely reflect the costs of providing services that don't vary by usage," said PPL spokesman Bryan Hay. "Few of the costs involved in maintaining, upgrading and operating our distribution system vary according to usage."
With PPL Electric Utilities formally separated from the power generation business as a result of deregulation, the utility has become a deliverer of electricity. The distribution rates and customer charge are the key way the company recoups costs and makes money. The PUC rate-making process allows PPL to earn a 10.4 percent profit on its operations and incorporates that into rates charged to customers.
This most recent rate increase will result in a $71 million in additional revenue for the utility. PPL sought $106.6 million in hikes.
In a prepared statement, PPL Electric Utilities president Gregory Dudkin said the rate increase will allow the company to recovery costs from distribution system improvements over the last two years and access capital market to pay for future improvements. The company will spend $3.6 billion through 2016 to upgrade transmission and distribution systems.
PPL's last major rate case was in 2010, when the PUC awarded PPL $77.5 million of a requested $114 million rate increase. That hike kicked in Jan. 1, 2011.
PPL provides service to 1.4 million customers in 29 counties in eastern and central Pennsylvania.
Contact the writer: dfalchek@timesshamrock.comBy the numbers
-â62 percent increase to PPL customer charge, from $8.75 to $14.09 per month.
-â4 tenths of a cent decrease in distribution rate, from 2.55 cents to 2.51 cents per kilowatt-hour.
-â3 percent net increase in monthly bills. For a home using 1,000 kilowatt-hours, that means $121.19 per month instead of $117.63.
-â10.4 percent profit the PUC allows PPL to earn.
-â$77.5 million awarded to PPL in 2010 by the PUC. It had requested $114 million.
-â1.4 million customers served by PPL.