Duquesne Light Requests First Base Rate Increase Since 1987
08 April 2006 - 1:05AM
PR Newswire (US)
Reflects Increasing Costs Over Past 19 Years, Including Necessary
Electric Infrastructure Upgrade; Proposed Customer Rates Would be
Below 1992 Levels PITTSBURGH, April 7 /PRNewswire-FirstCall/ --
After almost 20 years without a base rate request, Duquesne Light
today filed for rate adjustments with the Pennsylvania Public
Utility Commission (PUC). The proposed rates, which would be below
1992 levels, would help the company to offset increased costs to
provide service, including its ongoing upgrade of the region's
electric infrastructure. "We are investing more than $500 million
in the region's electric infrastructure to ensure local residents
-- and the businesses and communities that are so critical to this
region -- are connected to a secure, safe and reliable source of
energy," said Morgan O'Brien, Duquesne Light president and chief
executive officer. "While our transmission and distribution system
has served customers well for decades, various components are
nearing the end of their useful operating lives. This upgrade of
the wires, poles, transformers, substations, underground circuits
and other equipment that deliver power to customers' homes and
businesses is a necessary, proactive investment that also is
creating several hundred new jobs for our community." Duquesne
Light has implemented significant process improvements to control
costs over the years but has reached the point where the company no
longer is able to offset increasing operating and maintenance
expenses through these types of initiatives, and significant
capital expenditures are required to deliver reliable service. "We
now must increase our rates to recover our current cost of service
as well as the cost of new investments made to serve customers,"
O'Brien said. "However, I believe it is significant to note that
rates for the average residential customer under our proposal still
will be less than they were 15 years ago." For a residential
customer using 600 kilowatt-hours per month, PUC approval of
Duquesne Light's request would result in a $12 increase in the
overall monthly electric bill. The proposed total new rate of
approximately 12.6 cents per kilowatt-hour is about 10 percent less
than what that customer was paying 15 years ago. By way of
comparison, pricing for other utilities has increased significantly
since 1992. Natural gas prices in Pennsylvania are up 115 percent,
while, on average nationally, water and sewerage rates have
increased 64 percent and the average cost of cable and satellite TV
service has increased 78 percent. The proposed new rates will
reflect increases in the distribution and transmission portions of
customers' monthly bills. The transmission portion must be reviewed
and approved by the Federal Energy Regulatory Commission (FERC).
Duquesne Light's generation service, for customers who have not
chosen another supplier, remains fixed through the end of 2007. As
part of its filing, Duquesne Light is proposing substantial
increases in funding to help verified low-income residents in the
company's Customer Assistance Program (CAP), so that their overall
monthly electric bills will remain essentially unchanged. CAP
participants pay a percentage of their budgeted bill for current
electric service, and arrearages are forgiven over time. In
addition, Duquesne Light proposed to the PUC that the company
continue its new Stay Warm programs, which helped restore service
to low- income customers and provided other working poor customers
credits to offset arrearages on their accounts this past winter.
The cost of providing electric service has increased substantially
over the past 20 years, O'Brien noted. "We continue to see
significant cost increases in many areas of our business, including
fuel, health insurance, property insurance, transportation and
labor," O'Brien said. "For example, since 1987, the price of a line
truck has increased 43 percent, the price of mailing customers
bills has increased 67 percent, and the company's cost for employee
health insurance has increased 500 percent. In addition, Duquesne
Light is in the midst of a significant capital investment program,
which is taking place throughout our service territory. It is
designed to replace older, outdated and inefficient equipment and
to ensure that the region will be able to support new business
growth and other forms of economic development by meeting the
changing and expanding energy demands of the new century."
Infrastructure improvements that are part of this capital
investment program include: - upgrading underground lines and
equipment that have been in service in some suburban neighborhoods
as far back as the 1960s; - improving power capacity to serve the
expanding electricity needs of hospitals and universities in the
Oakland area; - refurbishing and reinforcing the aging underground
systems that power sections of downtown and surrounding urban and
commercial areas; - upgrading transmission lines that will improve
the flow of electricity in the eastern part of Duquesne Light's
service territory and help to balance the power load throughout
Allegheny and Beaver counties; and - converting older distribution
circuits to make use of newer technology to improve reliability. To
help complete these projects, Duquesne Light has added 150
full-time employees to its workforce. In addition, approximately
150 project-specific positions will be available to skilled trades
people in the region over the next several years. Duquesne Light
expects PUC review of its filing to take approximately nine months.
The company believes new rates will go into effect in early January
2007. About Duquesne Light Company Duquesne Light Company is a
leader in the transmission and distribution of electric energy,
offering superior customer service and reliability to more than
half a million customers in southwestern Pennsylvania. DATASOURCE:
Duquesne Light Company CONTACT: Media, Joe Balaban,
+1-412-232-6848, or Financial Community, Darrin Duda, CFA,
+1-412-393-1158, both of Duquesne Light Company
Copyright