PPL, Peco join list of utilities seeking big fixed fee hikes

Dive Brief:

Peco Energy and PPL Electric, the dominant Pennsylvania electricity providers, have joined the ranks of U.S. utilities asking for increased fixed bill charges to ratepayers to offset diminishing kilowatt-hour (kWh) sales, the Philadelphia Inquierer reports.
Peco wants the Pennsylvania Public Utility Commission to approve a 68% monthly residential customer charge increase, from $7.13 a month to $12. PPL wants its current $14.13 monthly residential fee increased 42% to $20. Both also proposed increased commercial and industrial customer charges in filings late last month.
The shift to fixed charges is opposed by low-income customers, fixed income customers such as seniors, and renewables owners who expected reduced utility bills from investments in rooftop solar and other distributed energy resources (DERs) through a reduction in kwh consumption.

Dive Insight:

PPL increased its customer charge in 2013 from $8.75 a month to $14.09. Peco Energy raised its monthly customer fee to $7.25 in 2011.

The push for higher fixed charges is a trend throughout the nation, backed by many of the nation's largest power companies and their trade group, the Edison Electric Institute.

Wisconsin regulators gave their major utilities fixed fee increases late last year. More recently, Connecticut granted a large fixed fee increase. Arizona municipal utility Salt River Project approved a fixed charge increase last month, and APS proposed one last week. Minnesota’s commission turned down an Xcel request and Washington state’s commission refused a proposed Pacific Power & Light Co. fixed charge.

Fixed charges are opposed by environmentalists because they diminish the incentive to conserve energy and weaken rooftop solar's value proposition. The Pennsylvania Consumer Advocate Office is considering opposition to the Peco and PPL proposals.

Utilities argue they need increased revenues from fixed charges to provide safe and reliable services with aging infrastructure. Energy demand growth for most utilities has been stagnant since the financial crisis, and advances in energy efficiency and rooftop solar have also cut into kWh sales for power companies.

Utilities also argue they need to offset a cost shift created by owners of DERs. When volumetric energy use is reduced, fixed charges drop proportionately, shifting the burden to non-DER owners for the costs of system maintenance.