Electricity deregulation

Electricity deregulation - October 15, 2006 Competitive Era...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
October 15, 2006 Competitive Era Fails to Shrink Electric Bills By DAVID CAY JOHNSTON A decade after competition was introduced in their industries, long-distance phone rates had fallen by half, air fares by more than a fourth and trucking rates by a fourth. But a decade after the federal government opened the business of generating electricity to competition, the market has produced no such decline. Instead, more rate increase requests are pending now than ever before, said Jim Owen, a spokesman for the Edison Electric Institute, the association for the investor-owned utilities that provide about 60 percent of the nation's power. The investor-owned electric utility industry published a June report entitled ''Why Are Electricity Prices Increasing?'' About 40 percent of all electricity customers -- those in 23 states and the District of Columbia where new competition was approved -- mostly paid modestly lower prices over the past decade. But those savings were primarily because states, which continue to have some rate-setting power, imposed cuts, freezes and caps at the behest of consumer groups that wanted to insulate customers from any initial price swings. The last of those rate protections expire next year, and the Federal Energy Regulatory Commission and other federal agencies warn in a draft report to Congress that ''customers may experience rate shock'' as utilities seek to make up for revenue they did not collect during the period of artificially reduced prices and to cover higher costs of fuel. They warned that ''this rate shock can create public pressure'' to turn back from electricity prices set by the market to prices set by government regulators. The disappointing results stem in good part from the fact that a genuinely competitive market for electricity production has not developed. Concerned about rising prices, California and five other states have suspended or delayed transition to the competitive system. And voters around two California cities, Sacramento and Davis, will decide next month whether to replace investor-owned utilities with municipal power in hopes of lowering rates. Drives are under way to expand public power in Massachusetts. In Portland, Ore., the city council tried and failed to buy the local utility company. Electric customers in other states are facing rude surprises. In Baltimore, an expected 72 percent rate increase in electricity prices has aroused so much protest that the state legislature met in special session, where it arranged to phase in the higher costs over several years. In Illinois, rates are about to rise as much as 55 percent. The three New York area states opened their electricity markets to competition, with different results.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Electricity deregulation - October 15, 2006 Competitive Era...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online