UPDATE July 9,2003 -- New Jersey utility PSE&G on Wednesday reached an agreement with the state's Board of Public Utilities to raise customer electricity bills by $159.5 million, a source close to the situation said.
Under the agreement, PSE&G, a unit of Public Service Enterprise Group Inc., will be able to add an additional $64 million in revenue beginning in 2006 so long as the returns are not deemed excessive by the BPU.
Public Service Electric & Gas's residential customers will see their electric bills rise 15.1 percent, the first in a wave of spikes expected to jolt consumers this summer, as the state lifts a 4-year-old rate cap.
Editorial Screed 5/14/01
Energy Consumer's "Choice" - Rock vs. Hard Place
We are all citizens of a power-consuming nation, habituated to believe that we will always be able to access all the electricity we need to live, work, and play. In our town, for instance, access to electrical power is taken for granted in public discussions of our future economic development and prosperity.
Trouble is, we don't have a modern power system.
From generating plants to huge, humming transmission towers along our highways to low-voltage lines carrying power to ever more and more homes and businesses, our nation's electricity-producing infrastructure has not been seriously upgraded in a long time.
In fact, construction of new power generators over the last ten years has virtually ceased, and investments in the distribution network - the channels that get the power to energy consumers - have been spotty at best.
So as demand has gone up, the infrastructure has only grown older.
Are we running out of electricity? Nah - but there is little doubt that we will be vulnerable to shortages and questionable power reliability in years to come.
According to the U.S. Energy Department, our nation can still produce more megawatts than it can consume-but they hasten to add that the margin of error is very slim.
5/8/01 ROLLING BLACKOUTS - Hot weather combined with insufficient power supply forced two days of power cuts /rolling blackouts for energy consumers in California. The cuts amounted to power for 300,000 homes. Meanwhile, the retail price of gasoline reached an historic high, and Mid-Westerners face gas prices of $3.00 per gallon. Electricity shortages and increased gas prices are expected to continue.
The Energy Department says the nation's power grid has barely kept pace with demand.
Over the last decade, the grid has seen single-digit percentage boosts in capacity - but double-digit rises in peak summer demand.
Some of the largest power systems on the North American continent experienced an all-time high peak load in July of 2000 which had not been predicted to occur until 2002.
BTW, the recent flurry of announcements from energy companies re: planned construction of new power plants usually fail to mention that it takes about ten years to get a new power plant up and running.
Take a moment to consider the total electrical energy consumed by all the residences and businesses in Vernon right now, especially during the summer months.
What is Vernon's townwide "peak load" of electrical energy use projected to be in the next two years? In ten years? How about energy use outlook for all of Sussex County's municipalities combined in the next two years? If anybody out there has the slightest idea, please let us know.
The average U.S. household spent $1,338 a year for energy back in in 1997, according to DOE's Energy Information Administration (EIA).
That same amount represented appx. three months of avg. household electrical bills paid by many thousands of folks in energy-deregulated, pre-emergency-price-capped California last year.
Imagine getting an electric bill for $400.00 every month.
Good old California - always a year or two ahead of their Yankee cousins...
Energy Wholesale Suppliers - Hoist The Jolly Roger
Meanwhile, what's up with the power suppliers hereabouts? Specifically, who's supplying the electricity used by Vernon NJ residents and businesses today?
The actual suppliers, not to be confused with the local "utilities" (nowadays the utilities don't generate power, they buy it wholesale by the kilowatt-hour from suppliers).
For instance, last we saw, Sussex Rural Electric Co-Op buys most of its power from Allegheny Energy Supply (mostly nuclear power)of Greensburg, Pa., a unit of Allegheny Energy Inc.
Recently, Allegheny won a contract to supply more than 200 MegaWatts of electricity worth $135 million annually to members of the Chemical Industry Council of New Jersey. The CICNJ has 64 member corporations, including General Motors, Mobil, Hoffmann-La Roche, and Schering Plough.
Big companies who can "pass along" (i.e., increase prices for their products) any future rise in energy bills - the "trickle up" theory, as it were.
At the same time,individual consumers who tried switching ("consumer energy choice") to Allegheny Energy Inc. on the company's website got back an e-mail warning of upcoming rate increases that will mean "significantly higher monthly electric bills than if you remain with your local distribution company."
As electricity demand has increased, and as the cost of fuels has gone up, the consumer savings promised by electric utilities deregulation are seriously browning out.
5/8/01 U.S. Energy Secretary Spencer Abraham faced tough questioning by GOP and Dem lawmakers alike concerning the Bush Administration's plans to cut energy research by 30%, with programs including solar and wind energy slashed by 50%, at a time when rolling blackouts and $3.00 per gallon gas prices dominate the nation's news.
According to Republican National Committee polls, energy costs are affecting voters' views of the economy - and , for the first time in years, the Economy has overtaken Education as the voters' top issue.
Wholesale electricity prices have jumped, prompting most of the "alternative" suppliers to raise their rates above those charged by providers of last resort, whose rates are still capped.
GPU, which also buys energy from PA suppliers, is just waiting until the rate caps come off in 2003 - at which time GPU expects to pass along a "deferred expense" of Who Knows How Much (by the end of this year it'll be appx.$700 million) to its NJ customers.
This is because NJ allows electric utilities to "recover" money lost as a result of "buying high and selling low."
The rate caps have so far afforded consumers a safe haven from rising costs, but GPU says that its customers will have the rate caps to blame when a California-style billing nightmare unfolds here.
California's deregulation of its electric power industry and the resulting massive energy blackouts, brownouts and predicted 1000% increases in electric bills do not bid fair for the rest of us. Here's a quote from Roger Bohn, associate professor of management at UCSD's Graduate School of International Relations and Pacific Studies, an expert on technology and operations management who served on the Market Monitoring Committee, was a key player in California's leading-edge deregulation of its electric power industry, and co-authored a book entitled Spot Pricing of Electricity:
"The problems California is having are aggravated by 'bugs' in the design and implementation of deregulation. There is plenty of blame to go around. Until a few months ago, a few large and powerful players were able to get most of what they wanted by dominating or bypassing the new organizations set up to implement deregulation. They pushed for rules at California's Independent System Operator (ISO) that favored them and worsened the situation for consumers. Now with the topic in the spotlight, this has shifted, as shown by the vote on the $250 ISO price cap. But there is a risk of going too far the other direction. Reregulation is not the answer because no rational company would build new power plants in a reregulated world."
Going from regulated energy monopolies to unregulated energy monopolies
When electric choice took effect, utilities kept their power lines and the responsibility for delivering energy.
But they were given the option of selling their power plants to help pay off their debts; GPU did so. Because its debts were high, GPU also sought and got permission to sell off 80 percent of its customers by 2003.
But last year, when GPU put 20 percent of its customers on the auction block, not one hand went up, said company spokesman Ray Dotter. Meanwhile, Dotter added, climbing prices on the wholesale energy market (where GPU buys its power) combined with the rate caps mean - you guessed it - "we're buying high and selling low."
Which, translated, means GPU customers stand to take a hosing when those rate caps come off. Otherwise, says GPU, its subsidiaries' "financial position and credit ratings … will continue to deteriorate; and, ultimately, their ability to continue to provide adequate and reliable service could be severely jeopardized."
The number one thing consumers want in an electric utility is adequate and reliable service, as GPU (and every other "electric company") well knows. After all, how long can you stay in business - or in your house - without lights or air conditioning or heat?
The utilities have seen that consumers will do whatever they have to do for as long as they can to pay their electric bills.
When electrical customers try to "choose" other suppliers they'll probably wind up paying as just as much, if not more.
The energy companies have been borrowing money from the banks to help pay their bills until the rate caps come off , at which time they can well and truly soak their customers.
Deregulation! It has come to mean that consumers should gladly take a hosing from any Industry - all in the great cause of freeing ourselves from the protection of government regulations.
5/16/01 - Folks in CA just got the news that they can expect their electric bills to increase fourfold.
Good old California - always a year or two ahead...
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