Price Jolt: Electric Bills Going Up, Up, Up
Here's a shocker: Electric bills are
heading up. Way up.
Electric bills across the USA are raising power prices
up to 29%, mostly to pay for soaring fuel costs, but
also to build new plants and refurbish an aging power
grid.
Even more dramatic rate increases are ahead. The
mounting electric bills will further squeeze households
struggling with spiraling gasoline prices.
"Consumers now face a tough reality on electricity,"
says Mark Cooper of Consumer Federation of America.
The electric bill increases come after rising fuel
prices already have driven up utility bills nearly 30%
in the past five years, the sharpest jump since the
1970s energy crisis. Fuel costs are again the main
culprit. In Virginia, Potomac Edison, citing high coal
and natural gas prices, plans to raise rates 29% on July
1, pushing an average monthly residential bill from
about $70 to $90. AmerenUE, Missouri's largest utility,
recently asked for its first rate increase in 20 years,
a 12.1% boost, mostly to cover higher fuel costs.
Customers of Public Service Co. of Oklahoma were socked
with a 25% rise on June 1.
The price of coal, which fires half of U.S. power
plants, has doubled since last year, largely because of
surging energy use in countries such as China and India.
Natural gas prices are up nearly 50% on high U.S.
demand. In California, drought has forced Pacific Gas &
Electric to replace cheap hydroelectric power with
natural gas, raising electric bills with a 13% rate
increases.
The cost to build a power plant has also gone up, more
than doubling since 2000. South Carolina Electric & Gas
wants to boost rates 37% by 2019 to cover its share of
two nuclear reactors costing $10 billion.
Some utilities are seeking several increases. In New
York City, Con Edison, which raised rates 4.7% in April,
seeks increases of 5% in each of the next three years to
fund $5.5 billion in equipment after a 2006 Queens
blackout. That's on top of an anticipated 13% rate
increase this summer on electric bills for higher fuel
charges. "We must make sure that our system has the
highest reliability," says Con Ed spokesman Michael
Clendenin.
Queens Assemblyman Michael Gianaris says Con Ed wasted
funds on new plants elsewhere and urges regulators to
reject the proposal. "I say not one penny more until
reforms are done," he says.
Expect bigger electric bill rate shocks if federal
legislation, anticipated by 2010, passes and forces
coal-fired generators to pay fees to emit global-warming
gases. American Electric Power, the largest coal-fired
generator, will have to raise rates 115% to pay higher
fuel costs, build new plants and recover global-warming
fees, says Hugh Wynne of Bernstein Research. But Wynne
says regulators could temper increases by trimming
profits.
Paul Davidson http://www.usatoday.com/money/industries/energy/2008-06-15-power-prices-rising_N.htm
Electricity Bill
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