A steep rate boost facing about 120,000 Dominion Peoples Plus customers in Duquesne Light Co.'s service territory could deal another blow to the state's halting efforts to promote competition in the energy business.

Dominion customers will pay 8.9 cents per kilowatt hour for electricity in January because the company has been unable to secure a long-term contract for electricity at competitive rates. Dominion's temporary rate, based on current market prices, is 29 percent higher than what its customers would pay if they switched to Duquesne Light, which provided their electricity before the deregulation experiment began.

Dominion spokesman Dan Donovan said soaring energy prices had made it impossible for Dominion to offer a competitive, fixed-price contract to its customers for the time being. While negotiations continue, Dominion's rates will vary month to month, Mr. Donovan said.

"We're asking for the patience and loyalty of our customers," he said. "We'd like to keep choice going. It's been good for all these customers. They've all saved money."

"Choice" is what state lawmakers had in mind when they voted in 1996 to deregulate the sale of electricity and natural gas.

While industrial and business customers have several suppliers to chose from, choices for residential customers have been few and far between, even in Western Pennsylvania, the region that's led the way in deregulation.

Last month, Green Mountain Energy, one of only two suppliers signing up new customers in Duquesne Light's territory, announced it was leaving the market. The Austin, Texas, company said that given its costs to purchase electricity, the only way it could survive would be to raise monthly residential bills by $30.

Community Energy, residential customers' only other choice, charges 9.4 cents per kilowatt hour -- 2.5 cents above Duquesne Light's going rate and a half penny more than Dominion will charge in January.

Mr. Donovan said Duquesne customers who switched to Dominion had saved 2 to 3 percent monthly because of favorable long-term contracts Dominion negotiated several years ago.

The lower rates saved customers $20 to $30 a month during the summer, when electricity usage peaks, he said.

However, Dominion's contracts are expiring and Duquesne's rates are fixed through 2007. Consequently, customers will pay $10 to $14 more in January if they stick with Dominion instead of switching to Duquesne, Mr. Donovan estimated.

He said Dominion hoped to negotiate a long-term contract by May to give its customers a competitive choice going into the summer months.

"We think part of this is a [hurricane] Katrina, Rita fallout," Mr. Donovan said.

There is no charge for switching from Dominion, according to Duquesne spokesman Joe Balaban.

"We've been getting steady inquiries from Dominion Peoples Plus customers," he said, adding that about 1,100 Dominion customers have switched to Duquesne as of yesterday.