The Greater Philadelphia Chamber of Commerce
Testimony on City Council Bill 100163
May 5, 2010

Good afternoon Chairman Jones and members of the Committee on Transportation and Public Utilities. For the record I am Joe Mahoney, Executive Vice President of the Greater Philadelphia Chamber of Commerce (GPCC). I am submitting this testimony for the record on City Council Bill 100163, an ordinance authorizing the City of Philadelphia to organize an authority to be known as the Philadelphia Energy Authority.

In these challenging economic times, energy costs are a matter of great interest to all residents and businesses in the City, and I commend the City Council for reviewing options to help manage these costs.

First and foremost I would like to thank Councilman Darrell L. Clarke and his Director of Legislative Affairs, William Carter, for extending the courtesy of a meeting with Denise Earley of my staff and a chamber member on April 20, 2010, to discuss this bill.

The City and all its residents and businesses currently have the right to shop for their energy needs, but aggregation may provide additional options. The Chamber believes that aggregation of customers to obtain more favorable energy pricing may provide a sensible way to reduce energy costs. There are a number of important questions that should be considered in setting up an aggregation program, including:

  • Whether the aggregation program would be focused exclusively on aggregating municipal facilities’ demand or would be extended to residential and small commercial businesses in the City;
  • Whether a program would be directly administered by the City, or promoted by the City, but administered by a private entity;
  • Whether a program would be structured as an “opt-in” program where only customers who choose to enroll participate, or an “opt-out” program where customers participate unless they have specifically declined to join;
  • How the City will administer the program and provide customer education to its residents and businesses about their choices.

We would be happy to work with City Council and other interested parties to develop an aggregation program that meets our shared goals.

However, the Chamber has serious concerns with the creation of an Energy Authority and does not see a sound business case for its establishment. The City already possesses staff with expertise on its municipal facilities and their energy needs who should take the lead in managing usage when rate caps expire at the end of this year. The creation of an Energy Authority could lead to direct involvement in volatile energy markets with high levels of risk for the City’s finances and long-term costs to residents and businesses.

Finally, we believe that it is critical to understand the current situation with regard to energy prices to inform decisions. The latest information provided by PECO indicates post-2010 rate increases averaging 10 percent — or approximately $8 per month for residential customers. While any rate increase is a challenge for City residents and businesses, this represents a much lower impact than earlier forecasts. Also, much of this increase is not related to energy supply costs and would not be affected by either aggregation or the creation of an Energy Authority.

Thank you for this opportunity.