Power companies likely to see a bump in high electricity costs

The nation’s power companies probably won’t see some relief from price spikes at the gas pump. With crude oil prices so high, the unhedged fuel price blowouts of recent years will only worsen, the…

Power companies likely to see a bump in high electricity costs

The nation’s power companies probably won’t see some relief from price spikes at the gas pump.

With crude oil prices so high, the unhedged fuel price blowouts of recent years will only worsen, the head of the commission that regulates rates on wholesale electricity said Monday.

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“One is forecasting a 10 percent to 15 percent increase” in wholesale electricity, said Thomas Powelson, chairman of the Federal Energy Regulatory Commission. He predicted the worst costs will only be seen after market-distorting price spikes.

The trade-offs of expensive fuel, additional pollution controls and capacity rates for pipeline operators are leading to higher electricity bills, Powelson said at an energy policy conference in Washington.

“No monopoly is going to be immune to that,” he said.

In its September report, the Federal Energy Regulatory Commission said that natural gas prices had leveled off and are likely to remain at current levels for the next several years.

But Powelson said that liquefied natural gas producers would be forced to sell at international prices, “which were historically a lot lower than domestically.” That will cost American consumers upward of $450 million annually, he said.

States will have to foot the bill. He said that though the commission is in charge of regulating the rates states and power companies pay for wholesale electricity, “even the fact that FERC prices are lower doesn’t relieve the cost to the customer.”

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