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Consumers could expect to see the price they pay for electricity change roughly every year, under state-proposed rules that would kick in once current rate caps expire.

Companies such as Duquesne Light and Allegheny Power in Southwestern Pennsylvania would use a competitive bidding process to buy power for residential customers and small businesses in their service territories, under regulations the Public Utility Commission proposed Thursday.

The local utility companies then would offer contracts at fixed prices for at least a year to customers who continue to buy power from them, rather than another supplier.

The proposed rules are the latest step in Pennsylvania's movement toward a competitive market for electricity. Consumer groups and businesses alike have criticized the PUC for slow progress in defining what local, or "default," electric companies will be required to do once their rate caps end in the next few years.

While the state's Electric Competition Act dates to 1996, local utilities that also own the distribution systems for their areas have continued to sell power at capped prices under "provider of last resort" agreements approved by the PUC.

Duquesne Light has a new cap that starts Jan. 1 and runs through 2007, with an increase of 7 percent over current rates. Penn Power's cap expires in 2006 and Allegheny Power's runs through 2008 -- although the Greensburg-based company is seeking a two-year extension. Elsewhere, rate caps run as late as 2010.

"For small customers, residential ones in particular, the key is to have stable, reasonable, affordable prices -- and I think that's where the commission is headed," Irwin A. "Sonny" Popowsky, the state's consumer advocate, said yesterday.

Allegheny Power and Duquesne Light both declined to comment yesterday. The companies want to study the rules and will submit comments during the approval process.

Also yesterday, the PUC approved rates for large commercial and industrial customers that still buy their power from Duquesne Light.

Those customers can choose a 17-month fixed rate that could increase their costs by as much as 25 to 30 percent next year, unless they take advantage of cheaper price for off-peak times. The rates are 7.44 cents per kilowatt hour for peak daylight times, 5.07 cents otherwise.

They also can buy power from Duquesne Light at prices that change hourly, with the market, or they can switch to one of several competing suppliers vying for business in Duquesne's territory, mainly Allegheny and Beaver counties.

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