Higher Electricity Rates Predicted Deregulation Likely To Bring Increases Across Northwest, Doe Study Shows

A report released this month by the U.S. Department of Energy indicates a good possibility that electricity rates in the region will go up when the industry is deregulated.

In fact, Don Reading, an economist serving as a consultant to a legislative committee studying regulation, on Friday called the report “the first serious study that shows a significant increase in the price of electricity in the Pacific Northwest” under deregulation.

Another economist, Tony Jones, told a committee meeting at the statehouse that the winners under deregulation will be big industrial companies and power marketers. Jones’ report said the losers will be some of the region’s utilities and “on the fence” will be small commercial customers, residential customers and small irrigators.

The Department of Energy this month released a 110-page report, on electricity prices in a competitive environment, the cost of generation services and what it will mean to the financial status of electric utilities.

The report said assuming that full-scale competition in generation services starts next year, retail prices for electricity could be 6 percent to 13 percent lower in two years.

Under conditions of intense competition, where many producers have access to customers and try price-cutting to get market share, prices could fall by up to 24 percent, the report said.

Reading said the Energy report doesn’t consider the so-called “stranded costs” that utilities face. Those are costs that utilities incurred under regulation, such as the expense of conservation programs, that can’t be recovered through lower competitive rates.

The experts involved agreed that some areas will fare better than others under deregulation with the Pacific Northwest, which enjoys the lowest rates in the country, likely to go up instead of down.