New Report Projects Electric Competition in PA Will Help Create More Than 36,000 New Jobs by 2004

PHILADELPHIA-Pennsylvania Gov. Tom Ridge recently announced a new report that projects electric competition will create more than 36,000 new jobs by 2004.

“Pennsylvania’s national leadership in electric competition continues to bring dramatic savings and economic benefits to Pennsylvanians,” Gov. Ridge said. “And, according to this new report, those savings and benefits will continue for some time to come.

“We expect electric competition will help create more than 36,000 jobs between 1998 and 2004, and have a major positive impact on our state’s economy. And millions of Pennsylvania families and employers continue to save money on their electric bills-without even lifting a finger.”

Pennsylvania Secretary of Revenue Robert Judge Sr. said the success of electric competition will lead to these new jobs because related savings give consumers more money to spend, creating multiplier effects on the state economy, and business costs have been reduced, giving employers more money to invest.

The new Department of Revenue report to Gov. Ridge and the General Assembly, “Electricity Generation Customer Choice and Competition,” studies the impact of Act 138 of 1996 during the period 1998-2004. Models used for the report show that the forecast reductions in retail electricity prices lead to the following economic impacts in Pennsylvania by 2004:

  • The real gross state product will be $1.9 billion higher;
  • Overall employment will increase by 36,400 full-time and part-time jobs, including more than 3,000 manufacturing jobs, nearly 7,000 retail-sector jobs, more than 5,000 construction jobs, nearly 2,700 transportation and public utility jobs, and more than 12,000 service-sector jobs;
  • Nominal personal income will increase by $1.4 billion;
  • The price index will decrease by 0.47 percent; and
  • The population will increase by 51,400 persons, as workers are attracted to job opportunities in Pennsylvania.

The report also notes that the effects result in greater Sales Tax and Personal Income Tax collections.

“Our research confirms that while consumers of electricity will realize rate reductions, there are many other benefits to Pennsylvania through electric competition,” Secretary Judge said.

Electric competition has provided Pennsylvanians with greater customer choice and savings to consumers and employers of nearly $3 billion by January 2001, according to the Pennsylvania Public Utility Commission.

Under Gov. Ridge, Pennsylvania now is known as the No. 1 state for electric deregulation-cited most recently by the Center for the Advancement of Energy Markets, an independent, nonprofit organization that promotes customer choice. Pennsylvania also is the first state to deregulate both electricity and natural gas.

Gov. Ridge led the push for electric competition and, in December 1996, signed the Electricity Generation Customer Choice and Competition Act. The Electric Choice Program went into effect in 1998.

A significant purpose of the Department of Revenue’s report is to monitor the revenue neutral reconciliation (RNR) used each year after deregulation for taxes paid by electric distribution companies, their successors and new retail entrants to the market. Act 138 of 1996 redefined the gross receipts tax base and instituted the RNR that fluctuates each year. Secretary Judge said the report suggests the RNR is working as it was intended to work.

Prior to the enactment of Act 138 in 1996, Pennsylvania’s retail price of electricity exceeded the national average.

The full report can be found on the Department of Revenue’s homepage through Pennsylvania’s website at www.state.pa.us or directly at www.revenue.state.pa.us. Two more reports (August 2001 and August 2002) will be produced and provided to the General Assembly and the Governor, as required by the law.