After the state Public Utility Commission (PUC) finalized the case between Penn State and Allegheny Power on Dec. 4, the university is preparing for its electricity rates to increase by as much as $18 million during the next two years beginning Jan. 1, a university official said.
Though Penn State plans to appeal the decision in Commonwealth Court, it is not likely a decision will be made on the appeal before Jan. 1, university spokeswoman Lisa Powers said, adding the likely increase in rates is "an unfair action."
"We know it will take a while to work its way through the court system once we file it. So, in reality, we are going to be paying higher prices for our electric costs," Powers said.
The increase in costs could result in an additional $25-per-semester increase in room and board rates to defray rising electricity costs if the university's appeal is denied, according to a university press release.
Average room and board rates are already set to increase by $225 per semester for the 2009-10 academic year, according to the press release.
Powers said information on whether students will be charged the additional fee is not available.
But Allegheny Power's corporate communications manager Doug Colafella said wholesale electric prices have decreased during the past few months and the projected $9 million per year cost increase could be lower than expected.
Penn State's fixed rate on electric bills for Allegheny Power is set to expire on Dec. 31 -- two years before any other Allegheny customer -- because the university opted to pay off certain costs in bulk between 1999 and 2003 to save money.
Though Penn State filed a request to have its rate cap extended, the PUC ruled Sept. 11 the university will be required to pay the market price for electricity beginning Jan. 1.
After the PUC's ruling, Allegheny Power filed a petition for reconsideration "for some clarification of technical language" in the ruling, PUC press secretary Jennifer Kocher said.
The PUC's Dec. 4 ruling on Allegheny's petition essentially ends the PUC's involvement with the case, she said.
To extend its rate caps, Penn State can appeal to Commonwealth Court within 30 days, Kocher said.
The university plans to do so once it is formally notified of the PUC's decision and has reviewed the decision to see if there were any "substantive change" on rates, Powers wrote in a subsequent e-mail.
Because of "plummeting" fuel prices, market prices for electricity may be lower than originally expected, Colafella added.
"I would suggest that the university is not looking at as steep a price tag as a few months ago," he said. "I don't think it's going to be nearly as bad as they think it's going to be."
Powers said lower-than-expected electricity rates would be "a fantastic New Year's gift."
