Every day, Joe Fretta fills the gleaming glass cases in his mom-and-pop Milford deli with homemade sausage, fresh cheeses and oversized dishes of eggplant parmigiana and pasta. Every day, he churns out platter after platter of Italian delicacies in the downstairs kitchen at Fretta's Italian Specialties, which he runs with his wife, Denise.
And every day he hopes for a miracle to end his financial woes.
Fretta, who's been featured in some of the country's most notable cooking magazines and whose dishes are renowned at at time when few people still make their own meats and cheeses, could lose everything: his home and his livelihood, a family business 100 years in the making.
The reason? He can't afford to pay his electricity.
Fretta lives and works in Milford, a Pike County village where electricity rates have risen by 67 percent -- 129 percent when you factor in the taxes.
"It's too much, too fast.
If it wasn't for credit cards, I could close up," Fretta says as he looks around the place to which he devotes seven days a week. "This story with the electricity, it just doesn't stop and everybody is feeling the effects of it."
Since last fall, when the caps on rates expired for Pike County Light & Power Co.'s 4,500 customers, electric bills have skyrocketed in Milford and neighboring Milford Township. For the small tourist area on the northern edge of the Poconos near the New York and New Jersey borders, the higher power costs have had a ripple effect on the regional economy, cost of living and lifestyles.
But what's most frightening about the Pike County predicament, according to economists and utility experts, is that what happened in Milford -- one of the first areas of the state where rate caps have expired -- could occur over and over in towns and cities across Pennsylvania as caps expire over the next four years. Caps for PPL, for example, expire at the end of 2009, while those for Met-Ed cease at the end of 2010.
It's already happening in other states. In Maryland, residents powered by Baltimore Gas & Electric Co. expect a 72 percent increase in their bills. And in Delaware, some customers face a 59 percent rate hike.
In Milford, Fretta and a number of other business owners have made do by not paying their full electricity bills. Instead, they pay the electric company what they paid last year plus, as Fretta puts it, "a little extra because I know it costs more now."
But by doing that Fretta has run up an $8,000 debt to the power company since January, and now frets the bills will ruin his credit. But he doesn't know what else to do. "If I pay the full amount, by winter, they'll put me out of business," he said.
Pennsylvania once a model
This is not how deregulation was supposed to work.
Before deregulation began a decade ago, most utilities owned both the power plants that generate electricity and the power lines that distribute it. States regulated both the generation and distribution charges, requiring that those fees be tied to costs only. But proponents of deregulation argued that splitting generation from distribution would create business competition, lowering prices.
Many states began deregulating the power industry, encouraging utilities to sell their power plants to other companies. Those that did had to buy back electricity to distribute to their customers.
Electric rates were kept low during deregulation because most states, including Pennsylvania, set caps on how much companies could charge for generation. As wholesale electrical prices rose, the cost to consumers remained artificially low.
Utility companies were able to stay afloat because they signed long-term contracts in the mid-1990s with electric generation companies, locking in their charges until the rate caps expired.
Indeed, Pennsylvania was heralded in the late 1990s as a model of deregulation for other states to follow, and in 2001 it was ranked as the nation's leader in electricity deregulation in a national study conducted by the Center for the Advancement of Energy Markets.
As part of deregulation, Pennsylvanians were allowed to switch electric companies as they shopped for better rates, and many did so.
Electricity bills soar as rate caps expire
Small community in Pike County among first to get socked. Lehigh Valley, rest of state could face same fate in a few years.
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