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Fixed-rate electricity prices can still rise

By: Paul Muschick |

If you sign a contract to buy something and are told the price is fixed, you’d assume that means you’d pay the same rate for the duration of the contract.
But that isn’t always true when you’re buying electricity from an alternate supplier in Pennsylvania’s deregulated market.

Some power suppliers are offering what they promote as “fixed-rate” service to residential customers but they still may hike prices in limited circumstances, the state Public Utility Commission warned recently.

The state says that can be misleading and hurt both customers and the broader retail market by souring people on the shopping process for electricity. It has proposed ways to clarify things for customers.

Keep this in mind when you’re looking for a new electric supplier, and make sure to read the fine print on all the paperwork. While the state has proposed solutions, the onus still will be on you to understand what you’re signing up for.

The state started investigating last fall after receiving complaints from electricity customers and inquiries from utilities and power suppliers questioning their competitors’ actions.

The PUC is concerned some suppliers, who have not been publicly identified, are marketing service as “fixed-rate” but also are leaving the door open to pass along any new costs levied on them by outside entities such as the Federal Energy Regulatory Commission, the PJM Interconnection, a government agency like the PUC or a court.

While the state has expressed concerns, it hasn’t initiated any regulatory actions against alternate power suppliers that are doing this.

The suppliers tell customers in their disclosure statements about the potential for a “pass-through” price increase, but the state says that’s not adequate because the notice may be buried in fine print that people might not read or understand.

“While consumers are expected and encouraged to carefully review the disclosure statements, presenting a product as having a fixed price that in fact can vary for any number of reasons could be seen as misleading,” the PUC said in a tentative order last month. “Even if a consumer read the entire disclosure, most are not sophisticated enough to understand what is meant by terms … and just what kind of pricing changes could result.”

The PUC says if customers become confused, they may be unwilling to shop around for power in the future or they may complain to state officials or the media.

“The combination of these potential effects could have a very adverse effect on the competitive retail market,” the PUC said in its tentative order.

The agency said many of the contracts that have this concerning language are multiyear contracts, which customers may not be able to break without paying substantial cancellation fees.

The state says it believes “presenting a price as being ‘fixed’ but subject to change due to pass-through clauses poses enough serious concerns that something has to be done to either prohibit this practice or to accommodate it in a way that is more transparent and fairer to consumers.”

The answer, according to the state’s tentative order issued May 23, is to allow power providers to advertise these types of plans under a new name — “price with pass-through clause” — instead of selling them as fixed-rate.
The state also proposes changing the definition of “fixed price” to specify it is an all-inclusive price that will remain the same for at least three billing cycles. Power providers would not be allowed to change the price during that period for any reason.

Anyone can comment on the proposals by writing to the Public Utility Commission, P.O. Box 3265, Harrisburg, PA, 17105-3265. You also can file comments electronically at http://www.puc.state.pa.us/efiling/default.aspx. Comments are due Monday.

The PUC will review the comments and decide whether to accept, reject or modify the tentative order.

Even if the state adds new terms and changes the definition of an old one, it’s still up to you to know what they mean. Ask questions and review the written terms before you sign up.

Vendini update: Last Thursday I told you about a security breach at box office service Vendini that may have exposed credit card numbers and other personal information of patrons of Touchstone Theatre, Cedar Crest College and the Lehigh Valley Charter High School for the Arts.

Thanks to tips from readers, I’ve since confirmed a few other local venues were affected. They are Penn’s Peak, near Jim Thorpe; Civic Theatre of Allentown; and Lafayette College’s Williams Center for the Arts in Easton. If you used your credit card to buy tickets at those venues, watch for fraud on your account and consider asking your bank for a replacement card.

Penn’s Peak, Civic Theatre and Lafayette College told me they aren’t aware of any of their patrons being fraud victims as a result of the breach.