Tuesday, March 30, 2010

Cities & States Face Raising Utility Electricity Rates

The City of Los Angeles, California and the State of Maryland are good examples of what other cities and states are facing when it comes to raising electricity rates. Both are trying to significantly raise rates in order to meet their bottom lines and to provide reliable electricity service. Utilities are still wrestling with botched deregulation, which California and Maryland royally botched. Both froze retail rates while deregulating wholesales rates. Now utilities need to raise rates just to recover from deregulation rate freezes. Although L.A. did not deregulate its power, California did. L.A. is attempting to implement renewables and conservation programs that are forcing the Department of Water and Power to call for rate increases.

Green energy is not cheap. States are promoting Renewables Portfolio Standards, which require utilties to deliver a certain percentage of their electricity from wind, solar and other alternative technologies. This power is usually more expensive than hydrocarbon-based fuels (coal and natural gas).

Los Angeles Mayor Villaraigosa is backing an L.A. City Council proposal to raise electricity rates about 22%, which would be achieved with four rate increases. Maryland is implementing a similar plan with a 76%.

The Center supports providing abundant energy supplies at reasonable prices. We support these rate increases because they are needed in order for the utilities to provide reliable power. We believe the rates are still reasonable even with the rate increases. (L.A. Times, 3/30/10, L.A. Times, 3/20/10, Maryland Restructuring--EIA)

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