Philadelphia Utility Monopoly "Owns" Customers as Municipality Tries Weak Aggregation

The Philadelphia City Council approved a Philadelphia Gas Works (PGW) plan to aggregate electricity for residents and business just as the Pennsylvania Public Utilities Commission (PAPUC) hobbled municipal aggregation and gave "ownership" of consumers to Philadelphia Electric Company (PECO).

Houston-based Enron Corporation asked Pennsylvania officials for authorization to purchase "default provider status" from incumbent utility PECOby transfering the 80 percent of consumers who are not expected to shop in the deregulated market to a customer pool "owned" by Enron. In return for its new "default-opoly" status in the Philadelphia area, Enron offered to pay $5.46 billion in stranded cost payments up front to incumbent utility PECO, and promised a 20% rate reduction to consumers.

However, the PAPUC ordered that incumbent utility PECO will "own" consumers free of charge with no rate reduction and a 100% consumer-carried stranded cost bailout: and omitted any language for cities or towns to interfere with PECO's ownership.

In the same week, the Philadelphia Gas Works got city council approval to aggregate 1500 Philadelphia electric consumers in a statewide, 14 month pilot program with Illinois-based energy company QST. However, without "Communitry Choice" powers to automatically aggregate consumers now "owned" by PECO, the city program is not expected to succeed. City Council members predict the program signals "the beginning of the end for PGW," whose city-owned gas system is also threatened in the legislature.

Peter Meadows Adels, a General Counsel to the PAPUC who drafted the order, said no party to the hearings requested Community Choice powers for local governments. "PECO will be your supplier unless you find an alternative," he said.

Copyright (c) 1998 by the American Local Power Project