Coming Soon to a Utility Bill Near You:Higher Electric Price$

June 2001 IBEW Journal

(First of two Parts)

The Bush Administration and the world are watching California slide into free market electricity chaos (see Related Stories), but it may be a cruel summer for other parts of the United States as well, especially New York and the Pacific Northwest.

Extended drought, fossil fuel energy shortages and environmental restrictions on the construction of new electricity generators all spell trouble for reliable electricity service. Add in the United States’ stressed electricity distribution systems, aging base load generation plants and increased demand for electricity, and the nation can choose any one of several factors to blame for high electricity costs.

And when electricity demand exceeds supply, the result is a lesson out of Economics 101.

“If our demand is outstripping our supply even at the current pace, we will need 1,900 power generating plants to keep up with demand by 2020,” said Mary Matalin, a top advisor to Vice President Richard Cheney.

The North America Electric Reliability Council, an association formed to promote the reliability of the interconnected electric system in North America, had not yet released its projections for the summer months as this issue went to press. But in general, expect higher costs and less reliability.

The U.S. Department of Energy’s Information Administration (EIA) has estimated that the national average price per kilowatt hour will be about 8 cents by the end of the year and increase another half cent in 2002. And over the next 20 years, U.S. electricity demand will increase 54 percent.

American consumers are facing increasing cost and reliability problems—as the IBEW predicted long before the California crisis—and claims of deregulation’s proponents that open-market competition would lower electricity prices are just plain wrong.

(Next month: a look at the effects of deregulation in Canada)...........

Part 2

• Northeast
• Midwest
• South
• Northwest

Related Stories:

Utility Section

California Deregulation Crisis Update