Rising Costs to Plateau?

Many will start their new year with resolutions, habits to form and habits to break but January will mark the beginning of higher utility bills for many.  Despite utilities giving fair warning, customers are shocked by the new rates on their bill. 

• Public Service Company of New Mexico (PNM) will use the 1.74 percent rate increase to cover the costs of smart meters and a six-year grid modernization project.  

• The Oregon Public Utilities Commission (PUC) approved rate increases for Portland General Electric and Pacific Power. The new rates will cover rising fuel costs and wildfire mitigation.  “Unfortunately, fuel cost increases and supply chain delays caused by global events, combined with increasing volatility in regional electricity markets, drive the price for utilities to produce and purchase electricity,” said PUC Chair Megan Decker.

• Appalachian Power Company in Virginia is seeking a rate increase to cover the 2015 retirement of eight of its coal-fired units.

• Colorado Public Utilities Commission has approved three rate increases by Xcel this year to cover rising gas prices. The price of natural gas doubled to as much as $8.81 for a million British thermal units (BTUs) before dropping in November.  However, the proce is still 25 percent higher than the start of the year.  “We understand customers are concerned with the rising cost of energy,” Michelle Aguayo, Xcel spokeswoman, said in an email to The Colorado Sun. “We want them to know we work hard to be good stewards of their money and are prudent in making investments that continue to provide a safe and reliable grid while leading the clean energy transition.” 

Despite rising costs, the transition to clean energy continues to be a priority to consumers especially among business customers.  According to K.C. Boyce, vice president at market research firm, Escalent. “Leadership during the energy transition is becoming table stakes for business customers, as they are making it clear that environmental performance is increasingly important to them.”

According to the U.S. Energy Information Administration, Utahans are paying one of the lowest rates in the country for electricity.  On average they pay $.825 per kilowatt which is $2.74 less that the national average of Idaho and Wyoming. Rocky Mountain Power spokesman David Eskelsen said, "PacifiCorp is committed to maintaining its position as one of the lowest-cost electricity providers in the nation."  The secret to their success?  The utility partnered with the California Independent System Operation to pilot its Energy Imbalance Market.  The system balances the power supply and demand across 10 states on a combined grid.

This approach hasn’t reduced utility bills for the majority of ratepayers entering the new year but there is light at the end of the tunnel.  IEA’s World Energy Outlook (WEO) is optimistic that fuel costs will plateau.  A WEO scenario based on today’s prevailing policy settings has coal falling within the next few years and natural gas demand plateauing by the end of the decade.