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PPL asks for rate increase
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PPL Electric Utilities has asked regulators to hit consumers with another rate increase.
With a looming 50-percent to 70-percent increase in electricity generation rates to kick in starting in 2010, PPL is seeking an increase in another smaller slice of the bill — transmission rates.
If regulators agree, the average residential customer would pay 74 cents more per month for the first year, the company estimates. That may be pocket change to consumers, but it is big bucks to PPL — millions in addition profits the company says it needs to reward investors and continue transmission improvements. The state’s consumer advocate opposes the move and considers the earnings requested by PPL to be “excessive.”
The company asked the Federal Energy Regulatory Commission (FERC) for a greater profit margin on its investment in transmission lines. Currently PPL receives a 10.6-percent return on those investments annually. The company wants to increase the return by a fifth, to 12.84 percent.
The company also wants FERC to apply a formula that would allow PPL to “true up” rates every year to reflect new investment and avoid the cumbersome, time-consuming process of petitioning for rate increases, said PPL Spokesman Ryan Hill. FERC has encouraged use of formulas, Mr. Hill said, as a way to accurately recover costs.
Transmission rates cover the cost of large power lines moving electricity from generators to the neighborhood transformers.
Mr. Hill said PPL plans to spend $1 billion in transmission improvements over the next five years, about half of that from the Susquehanna-Roseland N.J. line through Northeast Pennsylvania and the rest on improvements to other lines built in the 1960s and 70s.
“We need to move power and our investors expect a return on their investment,” Mr. Hill said. “Without a fair return, no one would buy our stock and we wouldn’t be able to raise capital we need to invest in transmission to keep the lights on.”
State Consumer Advocate Sonny Popowsky said what PPL wants goes beyond fair.
“The company is entitled to a fair return on its investment, but we think the returns are excessive,” he said, noting that transmission has the least risk of any segment of the electric industry.
He said profits between 10 and 11 percent, what the state Public Utility Commission typically allows, is more reasonable. Also, FERC’s accelerate recovery schedule allows utilities to start collecting on transmission costs before they are completed.
PPL would like to have the increase and new formula approved by Nov. 1 to go into effect Jan. 1.
Two FERC commissioners, Suedeen Kelly and Jon Wellinghoff, have railed against their fellow commissioners for granting “undeserved” incentive rates for transmission projects. However, they are in the minority.
PPL’s timeline could be important to the company’s chances, since the change in presidential administrations would likely prompt a change in the line-up of commissioners. The public discontent with energy costs in general is mounting. The Dec. 31, 2009 removal of the state-imposed rate cap will allow generation rates to float with market prices, driving up consumers’ bills by 30 to 67 percent
Contact the writer: dfalchek@timesshamrock.com
With a looming 50-percent to 70-percent increase in electricity generation rates to kick in starting in 2010, PPL is seeking an increase in another smaller slice of the bill — transmission rates.
If regulators agree, the average residential customer would pay 74 cents more per month for the first year, the company estimates. That may be pocket change to consumers, but it is big bucks to PPL — millions in addition profits the company says it needs to reward investors and continue transmission improvements. The state’s consumer advocate opposes the move and considers the earnings requested by PPL to be “excessive.”
The company asked the Federal Energy Regulatory Commission (FERC) for a greater profit margin on its investment in transmission lines. Currently PPL receives a 10.6-percent return on those investments annually. The company wants to increase the return by a fifth, to 12.84 percent.
The company also wants FERC to apply a formula that would allow PPL to “true up” rates every year to reflect new investment and avoid the cumbersome, time-consuming process of petitioning for rate increases, said PPL Spokesman Ryan Hill. FERC has encouraged use of formulas, Mr. Hill said, as a way to accurately recover costs.
Transmission rates cover the cost of large power lines moving electricity from generators to the neighborhood transformers.
Mr. Hill said PPL plans to spend $1 billion in transmission improvements over the next five years, about half of that from the Susquehanna-Roseland N.J. line through Northeast Pennsylvania and the rest on improvements to other lines built in the 1960s and 70s.
“We need to move power and our investors expect a return on their investment,” Mr. Hill said. “Without a fair return, no one would buy our stock and we wouldn’t be able to raise capital we need to invest in transmission to keep the lights on.”
State Consumer Advocate Sonny Popowsky said what PPL wants goes beyond fair.
“The company is entitled to a fair return on its investment, but we think the returns are excessive,” he said, noting that transmission has the least risk of any segment of the electric industry.
He said profits between 10 and 11 percent, what the state Public Utility Commission typically allows, is more reasonable. Also, FERC’s accelerate recovery schedule allows utilities to start collecting on transmission costs before they are completed.
PPL would like to have the increase and new formula approved by Nov. 1 to go into effect Jan. 1.
Two FERC commissioners, Suedeen Kelly and Jon Wellinghoff, have railed against their fellow commissioners for granting “undeserved” incentive rates for transmission projects. However, they are in the minority.
PPL’s timeline could be important to the company’s chances, since the change in presidential administrations would likely prompt a change in the line-up of commissioners. The public discontent with energy costs in general is mounting. The Dec. 31, 2009 removal of the state-imposed rate cap will allow generation rates to float with market prices, driving up consumers’ bills by 30 to 67 percent
Contact the writer: dfalchek@timesshamrock.com
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