Pennsylvania ranked third in electricity generation among the states in 2005 according to the U.S. Energy Information Administration. PJM Interconnection—an organization of electricity distributors, power generators, transmission owners, power marketers, and large consumers—forecasts a need for approximately 500 megawatts of new electricity generation annually to meet Pennsylvania’s growth requirements. A supply of reliable electrical power at competitive rates is a key factor in Pennsylvania’s industrial competitiveness and in maintaining the security and welfare of Pennsylvanians.
Currently, sixteen states allow all classes of customers—residential,
commercial, industrial—to select their electricity suppliers. Regulators placed
an upper limit, or a cap, on the price of electricity charged per kilowatt–hour
consumed (which is a rate). Rate caps shielded customers from significant volatility
in the wholesale electricity market. Many observers anticipate that electricity
rates will rise for Pennsylvanians after rate caps are removed.
In this presentation, we provide our preliminary estimates
of the Pennsylvania economic impact through 2015 of elimination of rate caps.