Utility rate hikes: disaster in the making

The storm of corporate greed in the aftermath of Hurricane Katrina knows no bounds, reaching far beyond the hard-hit Gulf Coast region. In the mean spirit of Halliburton and Bechtel’s no-bid FEMA contracts, on Oct. 7 the Philadelphia Gas Works (PGW) seized the opportunity to push through a 19.4 percent “no-bid” rate hike for the company’s 470,000 residential customers, citing rising wholesale costs for natural gas.

With cold weather approaching, this rate hike is a disaster in the making. The increase, which will add $335 to the average annual bill, follows a 4.9 percent rate hike on Sept. 1, and is expected to be followed by additional increases in December.

For residential heating, oil prices are also 48 percent higher than a year ago. Meanwhile, wholesale prices for crude oil and natural gas are actually declining from the highs reached right after Hurricane Katrina.

The potential deadly impact of PGW’s excessive increase is magnified by a Pennsylvania law passed last November allowing utilities to more easily shut off ser vice when customers can’t pay bills.

The Energy Association of Pennsylvania lobbied on behalf of electric and gas utilities for the passage of Act 201 [Chapter 14], which was adopted by the state legislature and signed by Gov. Ed Rendell without any public hearings. In the first four months after the bill took effect on Dec. 14, 2004, utility shut-offs soared 113 percent above the same period a year ago.

Act 201 allows utility shut-offs for delinquent payments when a family’s total income is 150 percent above the federal poverty level; eliminates a long-standing rule requiring personal contact or the posting of a shut-off notice 48 hours before service is cut, and allows immediate terminations without notice for “fraud or misrepresentation.” PGW maintains that a bounced check is grounds for an immediate service shut-off.

Utilities can shut off service to a house even when they know that an occupant has a serious medical condition. Service would be turned back on three days later if a doctor’s excuse is provided. Prior to Chapter 14, utilities had to give a customer three days to seek a doctor’s excuse before cutting service.

The act also makes it harder to restore service, regardless of the weather. Utilities can charge reconnection fees up to $124 (two months’ deposit) plus any amount still owed. In Philadelphia, reconnection costs could average $1,200 this winter, compared to $500 a year ago.

These draconian provisions have already resulted in several deaths, including three children who died in a fire started by an overturned candle used for light after a Pennsylvania Electric Co. computer ordered the power shut off for non-payment in May.

Just as the loss of lives from Hurricane Katrina was preventable, Pennsylvania’s legislature and Governor Rendell have the power to prevent the death toll sure to mount as the full impact of Act 201 is felt this winter. This law needs to be overturned and PGW’s excessive rate hikes rolled back now.