Let the buyer beware.
Through the ages, that adage has applied to all kinds of purchases. Now we can add shopping for a new electricity supplier to the list.
The Pennsylvania Public Utility Commission since December has received more than 750 consumer complaints about electric bills that have doubled, tripled or risen even higher.
On Thursday, the commission voted to examine rules, policies and consumer education measures regarding variable rates in the electricity generation marketplace.
The PUC action is not intended to investigate the higher rates being charged by electricity suppliers. Rather, the agency wants to find better ways to inform and educate consumers about the contracts and rates they agree to.
In Berks County, the issue affects electricity consumers who have switched from Met-Ed or PPL Electric Utilities to contract with other suppliers in the open market.
Mike and Kim Austill of Bern Township are among the consumers who learned the hard way how volatile variable rates can be.
Mike said he thought he was being smart in December 2012 by shopping in the open market. He visited the PUC's list of certified electricity suppliers at papowerswitch.com and found his electricity provider, Met-Ed, was charging 8.18 cents per kilowatt hour. The lowest price he saw was 6.64 cents per kwh offered by Pennsylvania Gas & Electric, a subsidiary of U.S. Gas & Electric of Miramar, Fla.
The PG&E rate was variable, so Mike and Kim knew it could change on a monthly basis. And it did.
The rate jumped to 11.96 cents per kwh by July from 6.64 cents in January 2013. It continued to fluctuate slightly, until it jumped to 26.35 cents in January from 11.07 cents in December.
The Austills' bill for December was $282, but that paled in comparison to their bill for January, Mike said.
"We were expecting a higher bill for January because it was so cold, but not $437," he said.
A Widespread Problem
PG&E customers weren't the only ones affected by the price hikes. Rates went up for customers of other suppliers who either had variable rates or whose annual fixed-rate contracts ended Dec. 31 and were automatically converted to variable rates, said Jennifer Kocher, PUC spokeswoman.
More than 2.2 million Pennsylvanians have changed electricity suppliers since caps expired a few years ago. Most suppliers require customers to sign a new fixed-rate contract each year.
"When you are shopping you can lock into one-year or as many as seven-year contracts," Kocher said. "Or you can choose a variable rate. If you chose a variable rate, you should be aware the rate could change at any time."
As part of Thursday's action, the PUC wants to compel electricity suppliers to notify customers of price changes. The agency also wants suppliers to provide more information about variable rates, including how uncapped rates can rise without limitation.
"The PUC has no control over the price," Kocher said. "Some companies put in the terms and conditions that the rate increase can only be so much. That is all company-by-company based, so people have to read the terms and conditions of their contract."
Suppliers Also at Risk
Doug Marcille, president and chief executive of PG&E's parent company, USG&E, said he understands the surprise felt by consumers like the Austills. A number of factors, he said, combined to drive up electricity prices in January, including two severe cold snaps and a spike in natural gas prices.
Electricity suppliers, he added, are just as much at risk of incurring higher prices as customers are.
"There is certainly risk in any transaction," he said. "Over time, if consumers stick with the open market, they will benefit."
PG&E reviewed the Austills' January bill and agreed to refund all but the Met-Ed rate for electricity the couple used, he said. PG&E also was notified the Austills have applied to switch back to Met-Ed as their default supplier.
"We can afford it if we have to, but our concern is that there are people out there who can't handle this kind of price increase," Kim Austill said of the PG&E rate. "How many others are out there who had this happen to them and don't know how they're going to pay their bill?"
Electric Bill Tops Mortgage
Tricia Bubel of Wyomissing shares the Austills' frustration.
"My bill for last month is now more than my mortgage payment," she said.
Bubel said she switched to PG&E in July and was quoted a rate of 7.74 cents per kwh.
"They had a nice website that talked about their value-packed products, and I thought it was legit," Bubel said. "I knew it was a variable rate and would probably go up a little bit, but I'm in real estate and I know they can only charge what the market will bear."
Bubel said her monthly bills averaged about $137 under Met-Ed. Her bill for December's electric usage with PG&E was $387, the highest it's ever been for her three-bedroom home. And recently, she received the bill for January. It was $695, about $60 more than her monthly mortgage payment.
Marcille said his staff reviewed Bubel's bill and decided to give her the same deal the Austills received, while also allowing her to switch back to Met-Ed if she wished.
As of Thursday, PG&E's posted "price to compare rate," which is meant to entice new customers shopping on the state's retail energy marketplace, stood at 7.77 cents per kwh.
©2014 the Reading Eagle (Reading, Pa.)