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Deregulation May Deliver Power Bill Surge Nw Rates Would Rise 25 Percent, Study Shows

Fri., Sept. 26, 1997

Northwest electric rates would rise 25 percent or more - about $200 per household - but still would hover just below the current national average if the industry is deregulated, a government study said Thursday.

The biggest beneficiaries of deregulation would be East Coast states, especially New York, where current retail rates are more than double those in the hydropower-rich Pacific Northwest, according to the U.S. Energy Department’s Environmental Information Administration.

California also would enjoy as much as a 25 percent reduction, partly as a result of contracts soaking power from the Columbia River system through 2015, the report said.

In fact, the head of one utility in Seattle says out-of-state exports, combined with the high cost of natural gas to replace the electricity, could be the leading cause of sharp rate hikes in Oregon and Washington under several deregulation scenarios bouncing around Congress.

“Every comprehensive analysis we’ve seen on the issue shows higher prices for the region as a consequence” of deregulation, Seattle City Light Superintendent Gary Zarker said.

Zarker raised his concerns in a letter this month to state Sen. Bill Finkbeinder, chairman of the Washington Senate’s Energy and Utilities Committee. He noted the “special relationship” built over the last 60 years between the region’s public and private utilities and the federally generated power on the Columbia River.

“If we do not protect these relationships in restructuring, the region will lose - economically, socially and environmentally,” Zarker wrote.

Overall, rates nationally would drop an average of 6 percent to 13 percent within two years after deregulation, the Energy Department report said.

But the price changes would vary from region to region.

The Pacific Northwest and the Upper Midwest are the only regions projected to suffer increases. The Northwest region includes all of Washington, Oregon, Idaho and Utah, as well as parts of Nevada, Montana and Wyoming.

By the year 2000, retail rates paid at the meter in the region would be expected to rise about 28 percent over the 1995 regulated rates, from 4.9 cents per kilowatt hour to 6.3 cents per kwh, the report said.

Current average U.S. price for electricity is about 7.1 cents per kilowatt hour.


 

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