And they turn around and raise rates because there is not enough revenue to support the infrastructure....
...that is at least how they justified an 87% increase in water rates here!
We all conserved too much...so they had to raise rates to keep the infrastructure up!
60% of the cost is generation, 40% is distribution
http://www.eia.gov/energyexplained/index.cfm?page=electricity_factors_affecting_prices
On the Generation side, costs are going up because they are forcing the premature closure of facilities:
http://www.oregonlive.com/business/index.ssf/2010/04/pge_files_to_close_boardman_co.html
Then on the Distribution side, you have people trying to use less:
http://www.oregonlive.com/business/index.ssf/2010/04/pge_files_to_close_boardman_co.html
Distribution is a fixed cost, it gets distributed across all rate payers via an add on to the price per kwh you pay.
This results in heavy users subsidizing the lower users.
Unsure at what point this system would become unstable, but it seems pretty stout compared to water cost factors. In my area, the cost of water is almost entirely driven by distribution costs. It is as if you are getting the water for free but you are paying for it to be delivered to your home or business.