Reading, PA, U.S.A. --- (METERING.COM) --- September 29, 2008 - Metropolitan Edison (Met-Ed) and Pennsylvania Electric (Penelec) are offering customers the opportunity to prepay a portion of their future electric bills, and earn interest, in order to smooth expected future tariff increases.
The Voluntary Prepayment Plan (VPP), which was filed last week with the Pennsylvania Public Utility Commission (PUC), offers qualified residential and small business customers an option to gradually phase in future generation price increases by making modest prepayments during the next two years, before rate caps expire at the end of 2010.
Each month customers who sign up for the plan would prepay an amount equal to about 9.6 percent of their electric bill. Prepayments would earn 7.5 percent interest and be used to reduce their electric bills in 2011 and 2012.
"The long period of capped electric rates has been good for customers, but has left a significant gap between what they pay for electricity and what it costs to produce it," said Douglas S. Elliott, president of Pennsylvania Operations for FirstEnergy, parent company of Met-Ed and Penelec. "This plan provides a way for customers to put money aside that would earn an attractive interest rate and be used to lower their future electric bills."
Under the scheme a residential customer using an average 1,000 kWh per month would prepay approximately $10 per month in 2009 and $21 per month in 2010, providing monthly credits of around $22.50 in 2011 and $12 in 2012. These credits will allow the future price increases to be phased in, whereas customers who elect not to participate are likely to face an increase estimated around 50 percent in their monthly bills in 2011 over those in 2010.
"The plan provides a way to help customers make a smooth transition to the market-based electricity prices that were called for under Pennsylvania's electric choice law," said Elliott.
Met-Ed serves 547,000 customers within 3,300 square miles of eastern and southeastern Pennsylvania. Penelec serves 585,000 customers within 17,600 square miles of northern and central Pennsylvania.