HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today approved a settlement that will allow Pennsylvania Electric Co. (Penelec) and Metropolitan Edison Co. (Met-Ed) to begin a Voluntary Pre-payment Plan (VPP) to help customers flatten projected rate increases.

"In May of 2007 the Commission approved a plan to assist retail electric customers through the expiration of the generation rate caps.  As part of this plan, we adopted a policy statement that encourages electric distribution companies to offer a rate mitigation option to residential and small commercial customers if the total retail rate would increase by more than 25 percent at the time the rate caps end," said Commissioner Kim Pizzingrilli in a statement.  "The companies will provide notice to their customers at the time the Commission acts on the VPP, before implementing it and during the term of the opt-in program. In addition, the companies will continue to educate consumers and provide information regarding the expiration of the rate caps, and that energy efficiency and conservation measures are available to assist customers in managing the size of their energy bills.  I find that the plan is consistent with the policy guidance we have provided electric distribution companies and is in the public interest."

The Commission voted 5-0 to approve the VPP, which is designed to allow customers to smooth out the increases for supply service that will occur when the companies’ generation rate caps expire Dec. 31, 2010. Rate caps were placed on generation rates as part of the 1996 restructuring of the electric industry. The VPP settlement was reached among the companies, Office of Consumer Advocate (OCA) and Office of Small Business Advocate (OSBA).

Under the plan, Penelec and Met-Ed customers can opt to pay a VPP charge monthly from March 2009 through December 2010. The amount collected plus 7.5 percent interest would then be paid back to those customers in the form of a VPP credit on participating customers’ bills from January 2011 to December 2012. The plan is available to residential and certain small commercial customers. 

As part of the settlement, the Commission directs the companies to begin its public notice campaign as soon as practical and to submit a timeline to identify its target dates for customer notice, as well as the anticipated start date for the VPP payments.