Commonwealth Foundation Testifies on Energy Affordability

On October 28, lawmakers and policy experts from across the Mid-Atlantic region convened in Harrisburg to address rising energy costs and discuss potential solutions.

Elizabeth Stelle, vice president of policy for the Commonwealth Foundation, was among the many who testified before the House Republican Policy Committee during a joint hearing on energy reliability and affordability.

Since Stelle’s testimony, the Pennsylvania House of Representatives advanced House Bill 1924, or the Load Forecast Accountability Act. The bill is similar to a policy reform highlighted by Stelle.

Below is Stelle’s written testimony. A video of the hearing is also available here (her comments begin at 36:13).

Good morning, Chairman Rowe, members of the committee, and lawmakers from neighboring states. My name is Elizabeth Stelle, Vice President for Policy at the Commonwealth Foundation. Thank you for the opportunity to provide brief remarks on Pennsylvania’s energy future. The Commonwealth Foundation promotes market-driven solutions that will benefit all Pennsylvanians. These policies must prioritize reliability, affordability, fairness, competition, and innovation so that we can unlock our energy resources and full economic potential.

I want to focus on three things this morning: (1) Pennsylvania’s record on affordable energy, (2) challenges to affordability, and (3) policy solutions to address rising rates, declining production, and the fragility of the grid we all share.

Pennsylvania’s Record of Affordable Electricity

First, the experience of Pennsylvania consumers. Over the past two decades, Pennsylvanians have enjoyed relatively slow growth in electricity rates. According to the U.S. Energy Information Administration, the average retail price of electricity for all consumers increased from 8.02 cents per kWh in 2003 to 12.57 cents per kWh in 2023. Since 2021, consumers have experienced a steeper increase in rates, albeit at a rate below the national average. In our September poll, 78 percent of Pennsylvanians reported that their electric bills had increased over the past year.

While today’s rising rates glean headlines, we should keep in mind the long-term trends. Consider the comparison rates in New Jersey, which soared from 9.48 cents per kWh in 2003 to 15.27 cents per kWh in 2023—far above the national average.

Self-Imposed Challenges to Affordability

Today’s challenges to affordability are, in many cases, self-imposed.

Consider your electric bill: The distribution charge includes costs for the universal service program and Act 129 energy efficiency programs. You may see a solar requirement charge to comply with the Alternative Energy Portfolio Standards Act and, of course, the gross receipts tax. In fact, the AEPS cost ratepayers an estimated $702 million last year. Add to these policy decisions fluctuations in the price of natural gas, a regulatory environment that discourages new generation, and the dramatic yet opaque load-growth forecasts, and it’s no wonder rates are on the rise.

In short, Pennsylvanians face affordability challenges because our state policies stand in the way of unlocking our full energy potential. As PJM noted in earlier testimony before the Senate Consumer Protection and Professional Licensure and Environmental Resources and Energy Committee, states should consider cost increases to consumers as a natural byproduct of state policy.

Policy Solutions to Rising Rates, Declining Production, and the Fragility of the Grid

Where do we go from here? We need a two-fold approach. First, removing policies that raise the cost of energy by giving special privileges to certain energy sources via carbon taxes or mandates.

This approach begins with removing Pennsylvania from the Regional Greenhouse Gas Initiative (RGGI), which 72 percent of Pennsylvanians oppose.

We must also avoid the governor’s proposals, the Pennsylvania Climate Emissions Reduction Act (PACER) and the Pennsylvania Reliable Energy Sustainability Standard (PRESS), which 74 percent of Pennsylvanians oppose. Our recent analysis finds that these programs would double residential electric bills over the course of ten years, resulting in $157.2 billion in new electricity costs.

Second, pass policies that promote energy production—everything from comprehensive permitting reform and reliability standards to market-driven solutions that navigate rising electricity demand. Ohio is a good model to consider. House Bill 15, passed last spring, sends a clear message that competitive markets are the best way to deliver affordable and reliable power to residents. It also worked to end subsidies that damage markets while also incentivizing new energy production—not through corporate welfare, but by lowering taxes.

In addition, Ohio’s equivalent to the PUC has adopted rules to proactively address the challenge of accurately forecasting load growth from large users, such as data centers. It’s imperative that Pennsylvania takes the same proactive stance to avoid expensive overbuilding, with rate payers left in the lurch. Forthcoming legislation from state Senators Gene Yaw and Nick Miller to strengthen the PUC’s oversight of load forecasting is worth serious consideration.

Finally, lawmakers should consider enacting a form of reliability standards to ensure that existing reliable resources are not removed from the grid until an equivalent amount of reliable resources is ready to replace them. In too many states, retirements outstrip deactivations, driving PJM’s reliability issues. And in the long run, Pennsylvania must be able to lean into its comparative advantage as the powerhouse of the Northeast, leveraging its affordable, reliable generation.

Conclusion

A people-first approach to energy policy that prioritizes reliability and affordability with market-driven solutions and a pro-energy regulatory approach is the best pathway to responsible and abundant energy, making Pennsylvania a leader not just for state prosperity but also for American energy security.

Thank you for the invitation to testify, and my thanks to the rest of the committee for your attention to this issue.

Again, thank you. I would be happy to address any questions you may have.