Residential electric bills would rise 6.8 percent, starting in January 2008, under a rate hike proposed Thursday by PPL Electric Utilities.

But at the same time, the company unveiled plans to give customers discounts for using power at off-peak hours, beginning in 2010.

The proposals are subject to the approval of the state Public Utility Commission. The PUC typically takes nine months to review a rate proposal.

PPL said the higher rates, expected to yield $83.6 million more annually, would cover increasing costs for distributing electricity. Distribution costs comprise about a third of the customer's total bill.

"We are making this request now to ensure that we have the resources in place to continue to deliver highly reliable electric service to our customers," said president David G. DeCampli in a prepared statement.

The proposed increase for residential customers is greater than the overall boost for all classes of customers — 2.7 percent — because PPL is phasing out a subsidy that has reduced residential rates for years.

Historically, PPL's industrial and commercial customers have subsidized residential rates by paying more than their share of costs. But Commonwealth Court last August disallowed that practice.

Under the new rate proposal, PPL residential customers using 1,000 kilowatt hours per month would pay $103.12, or $6.60 more. They now pay $96.52 a month.

Even if the new rates are granted in full, PPL rates would remain below the average in Pennsylvania and the Northeast, said the company.

PPL, which serves 206,000 customers in Lancaster County, had said in January that it would file a rate case this month. At that time, it predicted its rate proposal would be less than 7 percent.

Thursday's filing focuses on the cost of delivering power over 44,000 miles of distribution lines to 1.4 million homes and businesses in 29 counties of eastern and central Pennsylvania.

Since 2004 — before PPL's last increase in rates for the distribution portion of its service took effect in January 2005 — transformer costs are up 80 percent. Power line wire costs are up 25 percent.

Costs for employee health care, bucket trucks, fuel and other materials and supplies have grown by double-digit percentages, said PPL.

As those costs mount, PPL is continuing to invest in its system and work force to make its service more reliable and shorten outages, the company said.

At the same time, PPL is developing a time-of-use rate option that would enable customers to save money by shifting electricity use to morning, evening and weekend hours, when power is in less demand.

PPL has yet to calculate the potential savings under this option. A pilot program is expected to start in 2008.

A new Web site is planned for later this year that would let residential customers track their daily power usage, analyze changes in their home's energy use and get energy advice.

Eventually, said PPL, residential customers will be able to track their home's usage on an hourly basis and see two years of usage history, all online.

Another part of PPL's rate proposal would support energy conservation by providing rebates for programmable thermostats and compact fluorescent lights, by promoting energy awareness and funding "green" buildings.

Thursday's proposal would not affect the other two big parts of customer bills — generation rates (reflecting the cost of making power) and transmission rates (reflecting the cost of moving power from the generating plants to the local distribution network).

Generation rates are set through 2009. PPL has submitted a plan for securing generation supply starting in 2010; the plan is being considered by the PUC.

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