Good News, Bad News on Power Bills (Con Edison in NY)

NY Times ^ | April 10, 2009 | A. G. Sulzberger

[neverdem]

In advance of your next electricity bill, here is some good news and some bad news from New York regulators.

Good news first: plummeting fossil fuel costs have pushed wholesale electricity prices down by almost 40 percent since January, to their lowest level since 2003.

The bad news: Con Edison may soon charge significantly more to deliver that cheaper electricity.

How this tug of war will play out on electricity bills remains to be seen.

The New York Independent System Operator, which oversees the state’s power markets and distribution, announced this week [pdf] that the average cost of wholesale electricity dropped to $45.63 per megawatt-hour in March, from $73.28 per megawatt-hour in January, mirroring a decrease in natural gas costs. Over the last 10 months, natural gas prices and electricity prices have declined 63 percent and 64 percent respectively.

From March to April the average Con Ed bill, for 300 kilowatt hours, dropped from $74.07 to $71.73 because of the lower electricity costs. However, the actual price of electricity only accounts for a portion of an electrical bill, usually more than half.

The other charge is for the cost of delivering that electricity – such as maintaining power lines — which is determined through a regulatory process with the State Public Service Commission . Those delivery costs are almost certainly going up.

Con Edison expects to have a sizable rate increase approved by the commission by the end of the month. In January, two commission judges backed a one-year rate increase totaling $632 million, which is less than the utility had sought. The previous year the company was awarded a one-year $425 million rate increase...