Friday, December 15, 2006

Power Failure

Regulators have approved a 52% rate increase for United Illuminating. The governor and others had asked for more time to enact reforms (although a special session on energy issues was nixed by Democrats just a few weeks ago).

Here's the problem, for those who are wondering:
Because of deregulation, Northeast Utilities - which owns CL&P - and United Illuminating have sold off their power generating businesses and focused only on distributing electricity.

That means they must buy electricity for their customers from power generators and middlemen, and have told regulators that they already are bound to contracts that must be met. (AP)

There you go. The failure of deregulation. Consumers haven't benefited one bit.

Let's see if we get anything beyond a windfall profits tax out of the General Assembly next year, though.

Source
"Regulators grant tentative approval to UI rate increase." Associated Press 15 December, 2006.

23 comments:

Anonymous said...

I guess the DPUC wants all of us to be broke.

I really hate when the Spokesman for UI or CLP goes on tv and cry it isnt our fault we are just passing the cost on.

lets stop the act UI and CLP you just want to bleed everyone dry come clean with us.

GMR said...

I don't know if you can just throw up your hands and say "the failure of deregulation" because Connecticut has high electric rates.

There are 50 states in this country: many of the states have deregulated, yet have electric rates that are SIGNIFICANTLY lower than Connecticut's (and Massachusetts's as well for that matter).

For deregulation to work, you need to allow new entrants. But Connecticut doesn't really have this. Building new power plants is difficult to accomplish (geez, building the Norwalk-Bethel link was difficult to get through the locals protesting). So without new competition from other power generators, prices aren't pushed downwards. Meanwhile, there's immense demand created for electricity though additional building, installation of central air, etc.

Here again is the link to the EIA that has electric prices by state. Many of the lower priced states have deregulated (almost every state is lower than Connecticut).

Anonymous said...

Deregulation,just like privitization,was just another way for the very Wealthy Corperate Republicans to take a bigger peice of the pie whils screwing the bottom 98%.

Congratulations CT,You were taken just like the rest of the country.

Connecticut Man 1 said...

Correct me if I aqm wrong here:

These companies want us to reward them for having the short-sighted business sense of selling off their own power production capabilities for large sums of cash?

So now they (or their shareholders) have all of that money from selling out said product source; some other company is profiteering off of the infrastucture that used to be one of their sources of product; and they charge us more for their business blunder?

Did I wake up in Oz OR is this the epitome of screwing over the general public? How could this happen? (GOP business as usual: "BUT it is good for you... Keep it in the black!")

Please! Someone throw some water on George Bush and Jodi Rell and see if those two girls melt...

I want to know who the cheney met with! There is no GOOD reason that information like that should be considered classified. Tell us the truth.

Oh yeah! I have some more good news for everyone that owns their own oil wells... OPEC voted to cut production again today... It seems their leaders liked what cheney and bush had to say to them in their recent meetings. The Saudis weren't running off in a huff... They were just late for their OPEC meetings!

We pay... What??? Maybe 6 times the average rent or mortgage payment to live in a state that taxes us a few pennies less in income tax so that we can have the privelege of handing 8 times the savings in taxes to other private companies that are profiteering on things that should be considered basic neccessities but too many people can no longer afford because of the flying monkeys in the corparate world that need golden parachutes...

And whatever you do: Do not get sick of this... A doctors visit may end up in your eternal indebeted servitude to the insurance companies after you go broke paying for an aspirine...

Don Pesci said...

We have deregulation in name only. The system itself is a state protected and coddled monopoly. Connecticut and the entire Northeast should aim for energy self sufficiency. We can begin by creating a regulatory and business friendly envirionment in which energy providers (and other businesses) would feel confident that their investments will not be punished by non-friendly legislators and publicity hungry attorneys general. Gagging Blumenthal might help.

Anonymous said...

CT Man, if you don't like what OPEC or CL&P do to your wallet then you need competitors

But no, all forms of alternative power sources are "BANANA"ed to death by the save the planet folks.

Perhaps a socialist dictator that subdizes energy prices is the way to go, like Hugo Chavez taxing toilet paper so he can curry favor with American lefties by selling cheap heating oil

Anonymous said...

In order for deregulation you need to deregulate generation as well as transmission. Otherwise it won't work.

It may end up with higher prices in the short run but it'll help consumers in the end.

Anonymous said...

there is a right way to deregulate and a wrong way. ct did it the wrong way with the explicit agreement of UI and CL&P. why is that so surprising?

bluecoat said...

A problem in CT, besides the utility companies ripping off the ratepayers while selling off their power generation, is the distribution transmission system has for lack of a better non-technical description "bottlenecks" that cause congestion in the delivery system. That, the small size of UI and CL&P, and the fact that the utility companies dont' pay the lowest bid price for generation are mostly why the dereg model didn't work. It's all out there as information but you have Blumenthal who hates for-profit companies on one side, people who want to start up their own little local generation comapny on another and...on the other...Oh you know...special interests and the usual political SPIN that has no competent leadership (just the granny guv) to unspin it.

bluecoat said...

PS: for those who think that power must be generated close to the point of use just consider what ConED does to our west or think about the Hoover Dam that generates significant power for distribution to at least three states - AZ, NV and CA.

bluecoat said...

for any policy wonks out there that choose to study issues before solving problems here's::the New England Power Pool - ISONE::the New York Power Pool - NYISO

When you get down to it people who say that deregulation hasn't worked haven't given it a chance becasue it's only just getting into the implementationpahse. that said, the distribution companies made a bundle selling off their generating capacity with the benefits accruing to their stakeholders to the detriment of their ratepayer.

::ConEd sold off their stuff - generating palnts - but New Yorkers don't seem to be getting screwed like the Nutmeggers are.

bluecoat said...

And i forgot to mention that across the sound LIPA who buys their power on the open market and one day plans to go private isn't raisng rates this season. And did I forgot to mention that wallingford and a section of Norwalk have their own distribution companies that buy power on the open market but charge less than CL&P or UI. Yes, UI and CL&P are screwing the Nutmeggers with the help of Blumenthal and the legislature and the guv's - past and present

bluecoat said...

and I would be remiss if I didn't point out that the new transmission lines headed to Norwalk form the east and north will serve to alleviate the congestion and resulatnat congestion charges. anyone who says that Stamford's burgeoning development hasn't come with numerous costs spread out to existing residents and businesses, however, are clueless - power was inadequate to serve that development and it is only now being adressed, transportation remains a problem and the pressures to find housing and all that goes with that continue. I get called a Luddite by those who gain form all this crap - I just am tired of paying for others to get rich becasue of these dumb programs that lack any notion of forethought, accountability and performance measures. If all this development was good for the avrerage Joe then my taxes would be going down ., don't you think??

Grumpy said...

Wow. Funny to see the number of uninformed, misinformed, sort of kind of informed and outright loopy comments on this topic. Hopefully the members of the General Assembly, who are going to be tackling this issue soon, are better informed about energy issues. (Although, I'm not too hopeful that's the case.)

"Competition from other power generators," as GMR suggested, is not going to push down the price of electricity in Connecticut. Why? Because our problem is not one of limited generation supply. We've got plenty of power generation capacity in this state. Which is one of the reasons why generators haven't built new plants in recent years. There's little market for it. What some generators are looking at doing, is replacing their older and less efficient plants with newer more efficient plants. That would be a good thing to see happen.

When you cut through all the misinformation, the bottom line reason why electric prices are so high in Connecticut is that the price of the fuel used to generate electricity is so high. Take a good look at that EIA chart GMR linked to earlier. In general, the states with lower electric rates are in locations where fuel for power plants (whether uranium for nukes, coal or natural gas) does not have to be shipped long distances. Also, many of those states have large amounts of local hydro-electric and wind power online. New England, and especially Connecticut, suffers from the fact that we are at the end of the line when it to importing the fuel to run our power plants. The fuel costs the generators a lot of money. Therefore, we end up paying high electric rates.

Another thing you will see if you look at the EIA chart and compare it to a list of states that have partially deregulated generation, is that for the most part, deregulation has indeed failed to deliver cheaper electricity. (Remember those claims that deregulation would cut our energy bills 30%?)

People talk about an energy "crisis" in Connecticut. But there are really two different energy crises happening. The rise in energy rates is obvious. Partly, what's going on is that under Connecticut's deregulated generation system, generators have an opportunity to game the system and prop up the price UI & CL&P must pay for the electricity they deliver to customers. But this is not the root cause of high electric prices in Connecticut. That root cause is the quickly climbing price of coal and natural gas. (Again, take a look at the EIA chart and you will see states with large amounts of hydro and wind have lower electric rates.)

The second crisis is our transmission crisis. Basically, we've got all that generation capacity I referred to earlier, but it's not located near where our energy demand is highest. The ongoing projects to build more transmission lines are part of solving that problem. So is installing efficient and cleaner "distributed generation" nearer those communities.

But the biggest thing that can be done is to shift the way we think about meeting our energy needs over the long term. As I've mentioned a couple of times now, our problem is not really a lack of energy capacity. Therefore, spending billions of dollars to build new power plants is only going to increase rates because "someone" would have to pay for all that expensive new excess generation capacity. (Again, the exception would be if newer efficient plants were built and older inefficient plants were retired.)

What would help restrain future increases in electric costs would be for Connecticut to massively increase investments in energy efficiency measures that would actually reduce electric demand. In addition, we should be investing in cleaner, efficient small-scale local generation. (At the smallest scale, this means solar panels on rooftops.) Why would this work as a solution? Because the transmission constraints people talk about only occur for less than two weeks out of the year, when hot and sunny summer days cause a spike in electricity demand and the transmission lines serving SW CT are overburdened. Increasing the amount of small-scale local generation and using energy efficiency to reduce energy demand would cost-effectively deal with the problem of transmission "bottlenecks."

The Architect said...

Anon 11:42: The Republicans did this? Interesting... how did they do that? They haven't had a majority in the GA in years. Care to explain?

bluecoat said...

Grumpy: I was pretty much with you until your last two paragraphs. Solar is great and so is energy conservation/green bldgs, etc in reducing peak and total demand but solar is not a reliable solution to handle peak demand and besides the new transmission lines will eliminate the bottlenecks that were created by overdevelopment that will never be overshadowed by conservation.

Bo ItsHaky said...

There are few areas of concern (issues) to Connecticut’s Power generation & supply problem. Here are some solutions, any additional suggestions? Let’s hear it….
• Lack of competition? …Hello…? Encourage “true” competition

• Addiction to Energy? …Conservation, conservation, conservation

• Fossil Fuel as the substances of choice for power generation – expensive choice by means to the economy, environment, foreign policy, global peace/stability and beyond? …Advocate energy Alternatives such as photovoltaic, thermo-solar, wind, hydrogen technologies…etc

• Grid greed and Suppliers? …Promote residential and commercial self-reliant mini power units/plants, combining photovoltaic, fuel cell, hydrogen technologies, etc. There are some variations, for example excess generation (if any) by the units may be send back to the gri(ee)d and/or stored in batteries and/or will be utilized to produce hydrogen, later to be used by the unit’s fuel cell.

bluecoat said...

Oh Architect, you know damn well that the Governor was a Republican whose LG was Rell and the republicans along witht the Democrats signed off on the "deregulation" legislation prepared for them by the utility industry. You don't really think that legislators an d their legislative staffers have brains and talent do you??

Anonymous said...

Nice analysis by grumpy. Sure beats the Rowland/Rell/Republicans are to blame rant.

Anonymous said...

Bluecoat, the reason NYC has had three catastophic blackouts in the past 42 years is its reliance on bringing in power from Niagara Falls, 400 miles away

Yet another brilliant observation here from the King of All Issues, ol bc, baby

bluecoat said...

I see my monitor is back. ConED is recognized today as one of the most reliable electircal providers in the country and they're rates aren't going through the roof like CT's eventhough they have dereggulated as I pointed out. We were talking about price and supply issues anyway. The distance wasn't the reason for the outages anyway. Mr Smarty pants - it was a problem in the transmission switcheing technoilogy.

Anonymous said...

EVERYONE NEEDS TO FIGHT BACK BY SELLING EVERY SHARE OF UIL STOCK THEY OWN DO NET LET THESE PEOPLE FEEL LIKE THEY GOT AWAY WITH ANYTHING. TELL EVERYONE TO SELL! SELL! SELL! U I L!

Anonymous said...

Our CT lawmakers, Democrats and Republicans alike, have shirked their responsibilities to the taxpayers of this state by allowing these huge rate increases by NU. The inactions as well as actions of our representatives in Hartford is inconscionable and many CT families will suffer because of the inability to pay for electricity to heat and light their homes. Electricity is a basic need which many will have to do without because of inept representation. The average CT citizen must speak up on this issue or the situation will continue to worsen.