Problems abound for Pennsylvania’s electricity regulators.
Faced with aging power infrastructure, a mandate to boost use of renewable fuels, and a natural gas drilling boom in its midst, Pennsylvania’s Public Utility Commission has its work cut out for it in coming years.
In addition to its traditional role of balancing the interests of utilities and customers, the five-member commission must ensure progress toward Pennsylvania’s Alternative Energy Portfolio Standard, oversee the safety of new gas pipelines from the Marcellus Shale field, and encourage the renewal of electrical infrastructure.
Top of the agenda for Commission Chairman Robert Powelson is promoting a bill in the state legislature that would make it easier for utilities to build new infrastructure by allowing them to recover their investment more quickly than under the expensive and cumbersome rate-case system in which utilities apply for permission to raise their rates.
“It will incentivize utilities to get to their infrastructure issues,” Powelson told Breaking Energy. For power utilities, he said the prolonged rate-case process has been a “huge hindrance” to making needed improvements to equipment from light poles to transformers.
The commission is also seeking to more fully implement the market liberalization that allows electric customers to choose their power distributor in a state where only 18 percent of consumers have so far opted for a supplier other than their utility since rate-caps expired for the largest utilities in 2010.
The commission is scheduled to hold public hearings in June into the low rate of “shopping” by Pennsylvania electric customers, most of whom are still paying the “default” rate charged by their local utilities.
“How do you take care of the customers who don’t shop?” asked Terry Fitzpatrick, president and CEO of the Energy Association of Pennsylvania, a trade association. Fitzpatrick, a former PUC chairman, said the PUC is looking to the Texas model in which customers have to shop, and there is no default supplier.
How do you take care of the customers who don’t shop?
Other new priorities will include the regulation of gathering lines carrying natural gas from Pennsylvania’s massive Marcellus Shale field to interstate pipelines. “The Marcellus Shale is a game-changer in Pennsylvania,” said Powelson.
The newly abundant supply of cleaner-burning natural gas is likely to erode coal’s share of the power-generation market in Pennsylvania, especially as aging coal plants are retired, said Sonny Popowsky, the state’s consumer advocate.
For consumers, that may mean stable prices as lower generation rates offset an expected rise in distribution rates, Popowsky said.
The commission will continue to promote the adoption of wind, solar and another alternative fuels which at present account for less than 5 percent of the state’s capacity.
But achievement of AEPS, which mandates that 18 percent of the state’s power must be derived from renewables by 2020, may be hindered by consumer resistance to higher prices for alternative fuels as state assistance is cut in response to the budget deficit, said Fitzpatrick.
“The days of building more subsidies into this are probably over,” Fitzpatrick said.
Powelson, who was first nominated to the PUC by former Gov. Ed Rendell in 2008, is joined on the PUC by Vice Chairman John Coleman, a former CEO of the Chamber of Business and Industry in Center County, Pa.; Tyrone Christy, a former developer of independent power plants; Wayne Gardner, a former PECO manager, and James Cawley, a lawyer who has worked in the state Senate and the Commonwealth Court of Pennsylvania.
