Urging reform of the electricity system, Attorney General Richard Blumenthal asked state utility regulators Thursday to require the two biggest power companies in Connecticut to absorb the cost of delaying upcoming rate increases.[...]
"The rate increases should be deferred at least until the system is reformed with a windfall profits refunds and a Connecticut Electric Authority that will return money to consumers and effectively eliminate these unfair rate increases," Blumenthal said.
[...]
Gov. M. Jodi Rell made a similar request to the DPUC earlier on Tuesday. She asked regulators to defer any rate increases until the General Assembly has had a chance to work on reform when the legislative session opens Jan. 3. (AP)
Wow, deregulation is working great. Now both the electric companies and the consumers are over a barrel.
A "Connecticut Electric Authority" sounds like another terrible idea, however. What, exactly, would it do that DPUC can't?
Is there a way out of this? Do we need to build more power plants? Is this a symptom of the northeast's antiquated power grid? Rising oil costs? All of the above?
Source
"AG wants utilities to bear the cost of deferred rate increases." Associated Press 7 December, 2006.
12 comments:
Is there a way out of this? Do we need to build more power plants? Is this a symptom of the northeast's antiquated power grid? Rising oil costs? All of the above?
According to the US Department of Energy's EIA, Connecticut's average price for a KwH of electricity in August 2006 was 15.49 cents. However, in Illinois, it was only 7.78 cents, or about half as much. North Dakota is only 6.5 cents. Go to Wyoming and you'd only need to pay 5.37 cents. But go to Texas, where there's a lot of oil, and you'd pay 11.15 cents.
So the price of oil may have an impact from one year to the next, but there are a lot of other factors at play. It shouldn't be that much cheaper to get oil into North Dakota than it is to get it to Connecticut. And why is North Dakota cheaper than Texas?
I don't think the grid is the problem. We have a pretty bad grid, but that should really only matter in summer.
I think the real problem is simply one of capacity. However, that doesn't mean that if Connecticut decided to build more power plants, our electric rates would fall all that much. This is because the surrounding states also have very high electric rates -- 16.19 in Massachusetts and 15.19 in New York (and I'm sure that Westchester and surrounding counties are higher). So if new power plants were built in Connecticut, there's no assurance that that power wouldn't be sold into the grid and exported. The power plants are going to sell to the highest bidder. Rather, there needs to be a coördinated effort to get all Northeast states to build more power plants.
It's a difficult political issue to build a power plant: everyone in the Northeast wants power, but they don't want power plants. And since Connecticut is small, what happens in surrounding states can have a big impact on our electric prices.
New power generation is being fueled by natural gas. This generally burns cleaner which is positive for our environment but we relying on limited infrastructre to bring the gas into CT. Generators are reaping huge profits because of how we pay for electric production especially during high demand periods. Low cost generators receive a hugh rate bump whenever demand is high. Some generators are earning returns of 40% to 50% so the windfall-profit tax might be the way to go. It will be difficult to turnback the deregulation clock in the short-term. The real crime is that those at DPUC knew this was coming and did little to try and mitigate this problem. The big hits will also be on the large employers that are facing 56% hikes in the UI areas and 18.9% in the CL&P areas. You would be crazy to grow your business in this state.
Pick a product or service: electricity, heat, gas, oil, water, housing, grocery, car washing, etc., ad nauseum.
Then ask WHY is it always more expensive in Connecticut than the rest of the country? WHAT IS WRONG IN CT?
To Blumenthal: Too little, too late. I've written to you about this years ago. Why did you let it get this far?
"some generators are earning returns of 40% to 50% so the windfall-profit tax might be the way to go"
IAWTC..absolutely. And the fact that it got to this point (and I DO FAULT RELL FOR THIS.. WHAT IS SHE ASLEEP, AGAIN???) is disgusting.
our politicians just do not give a crap, at all. And as for growing new business in the state.. you're right. It's all part of the equation.
UI and CL&P argue that their profits are to be reinvested in transmission infrastructure upgrades. If this is true, does a windfall profits tax make sense? Anyone know?
bluecoat, do you remember which post?
Blumenthal has been one the biggest obstacles in the state to energy infrastucture upgrades.
As for turning electric power supply over to a State run power authority, just pray they remember to hit the "send" button.
By no means is this a quick fix, but this may help address both the generation and distribution questions:
http://www.energy.gov/news/4503.htm
"U.S. Department of Energy (DOE) Assistant Secretary for Energy Efficiency and Renewable Energy Alexander Karsner today announced that with DOE funding, a concentrator solar cell produced by Boeing-Spectrolab has recently achieved a world-record conversion efficiency of 40.7 percent, establishing a new milestone in sunlight-to-electricity performance. This breakthrough may lead to systems with an installation cost of only $3 per watt, producing electricity at a cost of 8-10 cents per kilowatt/hour, making solar electricity a more cost-competitive and integral part of our nation’s energy mix."
I don't see anything though on possible timeframes for nationwide household use, other than the year 2015.
Here’s a link to an inspiring story aired by ABC news on October 20, 2006:
http://abcnews.go.com/WNT/story?id=2592352
This man became a self made energy independent individual – where’s our Local, State & Federal governments problem-solving ingenuity?
saving the Long Island Power Authority (LIPA) approximately $17.5 million in energy costs." Savings that were lost to Connecticut ratepayers.
I don't think it's that simple. If at some point Connecticut had excess power, it would make more sense to ship it to LI than to not use it. Also, doesn't Connecticut import electricity from other states?
"effectively eliminate these unfair rate increases"
The cost to generate power increases and we somehow expect our electric bills not to rise as well?
Sounds like pretty unreasonable attitude to me considering what is used to fuel the electric plants.
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