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Calling the state's electric deregulation law an "unequivocal failure," Senate Democratic leaders Tuesday said utilities should have to limit yearly rate hikes to 5 percent and find the lowest, long-term prices for power to avoid hitting customers with sharply higher bills in coming years.

Senate members said they plan to introduce a series of measures to address forecasts that home and business power costs could rise by as much as 60 percent after the expiration of the last of the rate caps that were part of the 1996 deregulation law.

That's due to happen in 2011. While Sen. Vince Fumo, D-Philadelphia, said it's now "too late" for Pennsylvania to return to a regulated electric market, when the state Public Utility Commission set prices and determined the companies' profits, the state could go halfway.

"We should enact statutes that are in between a regulated and deregulated system," Fumo said, "to prevent companies from gouging their captive customers under their de facto monopoly."

The Democrats' proposal is the latest in a series of moves in Harrisburg to address fears of higher electric bills, which could affect more than 4 million customers still paying capped rates.

Last week, the Senate Consumer Protection Committee approved legislation sponsored by Sen. Robert Tomlinson, R-Bucks County, that would, for example, allow customers to defer rate hikes above 9 percent a year and would encourage long-term price deals.

Locally, two utilities already have shed the rate caps that were designed to ease the state's transition to a deregulated market.

Duquesne Light Co.'s rates for residential customers have risen gradually under a series of default service plans.

Penn Power's prices spiked last year by almost 50 percent and rose by 2 percent this year, but those figures will hold for the next two years.

Allegheny Power, part of Greensburg-based Allegheny Energy Inc., will venture into the deregulated market Jan. 1, 2011. The company for years had prices that were among the lowest in the state but, "those customers could be facing some very significant increases," because of volatile market prices for electricity, state Consumer Advocate Sonny Popowsky said.

Popowsky said the Democratic and Republican Senate bills plus a House measure to control power costs tackle issues that "we are really going to have to confront in the fall. The closer we get to the end of the rate caps, the harsher the results can be."

While Popowsky said Duquesne Light's series of long-term "portfolio" electric purchases have succeeded in controlling consumers' costs, Allegheny Energy spokesman Doug Colafella said that utility is conducing a series of auctions for power supply for its customers, starting in 2011. "We're taking a diversified approach."

The Senate Democrats' proposals include a return to a ban on winter service terminations for all nonpaying customers. A change three years ago allowed utilities to shut off service during the coldest months in some cases to customers with higher incomes who fall behind on their bills.

A recent PUC report noted shutoffs statewide are up by 37 percent, or 55,366 customers, this year, the Senate Democrats point out.

But reconnections are up by 57 percent, as customers pay off their debts or arrange payment plans, Duquesne Light spokesman Joe Vallarian said. "You have to give the whole story."

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