While the public's attention has been focused on the rising prices at the gas pumps, one Stamford industry expert said consumers soon should expect a high-voltage shock when they open their electricity bills.
The spike in natural gas and coal prices, which account for more than two-thirds of the fuel used for electric power generation in the United States, could lead to some painful electricity rate hikes this summer, according to Addison Armstrong, director of market research for Tradition Energy, an energy management adviser and procurement firm that has its U.S. headquarters in Stamford.
"Electricity, much like gasoline, is a refined product," Armstrong said. "And all of the inputs used to generate electricity, with the exception of wind, have gotten really expensive."
The expected decrease in imports of liquefied natural gas, coal shortages in Europe and China and low levels of natural gas in storage are all putting pressure on prices, Armstrong said.
In states with deregulated markets, prices could spike as much as 41 percent this summer when consumption is at its peak, Armstrong said.
In regulated markets like Connecticut, consumers are more insulated from increases, but still may face higher rates, he said.
But state officials said Armstrong's analysis may not be relevant to state consumers.
Because of the way Connecticut Light & Power has set up its
rate structure with customers, "we don't anticipate anything unusual
happening this summer," said
CL&P staggers contracts with its customers so they expire at different points, meaning if electric rates spike this summer, the agency would not have to impose an across-the-board increase, Lyons added.
The power company won't predict what its prices may be for customers getting new contracts this summer, but they are "crunching the numbers" and expect to hand in proposals to the DPUC by the end of the month, CL&P spokesman Mitch Gross said.
Those rates, on the power generation side of the bill, would go into effect July 1, he added.
Nationally, industry observers said they haven't heard of increases as much as 40 percent like Armstrong is predicting, but they did say may be tough for many consumers this summer.
"We are seeing higher input prices for electricity and it's across the board," said Dan Dolan, vice president of policy, research and analysis for the Electric Power Supply Association in Washington, D.C. "It's happening across the country, regardless of the competition structure."
Unfortunately, there's very little consumers can do to avoid the spike, Armstrong said.
"As a consumer, you have very little options unless you do something on the demand side," he said.
Consumers should raise their thermostats, clean the filters on their air conditioners, "whatever you can do," Armstrong said, and they also need to get used to the higher prices.
"The era of cheap energy is over," he said.
Comments