Deregulation's effects vary by area

In New Jersey and New York, electricity rates rose more slowly.

By Christina Gostomski | Of The Morning Call

July 30, 2006

In northeast Pennsylvania, where the Keystone state joins New Jersey and New York, three small towns within a five-mile radius provide very different examples of what can happen when states relinquish power over electricity deregulation.

MILFORD

Power prices rose more than 67 percent after electricity rate caps imposed by deregulation expired last year, and deli owner Joe Fretta is barely holding on to his business. He's given up paying what Pike County Light & Power charges, paying instead just a little more than he paid last year. He estimates he owes the company more than $8,000 and says he'll have to close shop if they try to collect.

MONTAGUE, N.J.

Just a few miles east of Milford, Don Bale, also a deli owner, says he's glad to be on the Jersey side of the border. Unlike Pennsylvania, which allowed Pike County Light & Power to buy all the electricity it needs for the next 18 months in a single auction, New Jersey required its electric companies to buy their power in three separate auctions spread over time. Rates still rose, but they didn't rise as dramatically as they did in Milford.

Bale's electric bill -- to run 10 compressors, several coolers, an ice cream freezer and air conditioning -- has crept up to $1,400 a month. But the gradual increases have allowed him to build the higher costs into his prices and budget.

PORT JERVIS, N.Y.

Gradual increases allow for gradual adjustments, but at some point they still surpass some customers' ability to pay, said Rosita Everett, who along with her husband rents 12 storefronts, 10 apartments and runs a bar here, five miles from Montague and just a few miles north of Milford.

When New York deregulated its electric utilities, it didn't impose caps -- allowing rates there to climb incrementally for a decade, far longer than New Jersey.

Now, the bills are nearly unbearable, Everett said. To pay them, the couple this year raised rent prices $100 a month to $600, hiked the washer and dryer rates from $1.50 to $2 and raised drink prices in the bar by 25 cents.

"They have to regulate it again," she said. "The locals don't make that much. There are no jobs here."

For some, the rate hikes have meant more than cutting back on discretionary spending. Harrison Morgan, a retired Port Jervis custodian living on $990 a month from Social Security and his wife's pension, saw his gas and electric bill jump from $300 to $500 a month this year. To pay the electric bill, he had to quit paying the medical bills he accumulated after being hospitalized for a heart attack earlier this year. Now, he worries he'll lose the house he can barely afford to heat.

"Money don't go around to pay that [hospital bill]. But I know I've got to start paying it soon or they're going to come after me. But there's not much I can do," he said.

christina.gostomski@mcall.com

717-787-2067