Pa. House Chair: 'We're Going to Have to' Cap Variable Rates; Free Market for Electricity 'Hasn't Worked'

The free market for electricity in Pennsylvania "hasn't worked" in its current form, Pennsylvania State Rep. Robert Godshall, Chair of the Consumer Affairs committee, said during a hearing yesterday on variable prices.

"No matter what we do, and what education is out there, there's people that shouldn't be signing up for, and can't afford to sign up for, variable rates," Godshall said.

"We're going to have to put caps on variable rates ... I don't see any other way," Godshall said.

Godshall has introduced HB 2104, which would specifically provide for the following limitation on variable rate products:

"The kilowatt hour rate charged to a residential or small commercial customer under a contract for a variable rate product may not be increased:

(1) More than once every six months.

(2) More than 100% of the rate charged during the preceding six-month period."

The bill would also define variable rate product as, "[a] retail electric generation product for which the rate may vary based upon fluctuations in wholesale electric market prices." (emphasis added)

Under the bill, a contract for a variable rate product offered by an electric generation supplier to a residential or small commercial customer may be for a term of no less than six months. Variable rate products could not include termination fees.

HB 2104 would also prohibit early termination fees on fixed rate contracts that are less than 24 months in length.