Deregulation Party Is Over: Get Ready For A Shock, Political Outrage...And Unexpected Benefits

deregulation electricity prices shocking bi-directional power meter photo

It's been a matter of faith in many US States that the free market is good - especially good in the matter of deregulation of power distribution and generation - because 'it will bring low prices and high reliability'. Being highly principled is less fun, now, that the opposite outcome is on the horizon for several states. And this, before any carbon cap and trade or carbon tax has even been applied!After a decade of expecting 'reduced costs from greater competition and lack of government interference,' stunning power bill rate increases are coming in states that have not "re-regulated." Here's an example:

PPL Electric Utilities Corp. customers have heard the magic number: 34.4 percent — the company’s projected percentage that bills are likely to increase in 2010 after its rate cap expires at the end of 2009...An analysis by the state Public Utility Commission has shown the volatility of the wholesale market that theoretically could bring increases as high as 67.4 percent, or about $71.78 a month. Other factors in the energy market over the next 16 months could exacerbate what is already a crushing increase on rate payers.
Via::Republican Herald, Electricity hike may be higher than projected

Getting past the outrage factor...what are the ramifications of order-of-magnitude rate hikes ?

Well, one predetermined outcome is a huge emphasis on conservation of electricity in homes, offices, and factories. Notes to self:

Remind family again to turn the lights off...timer switches for the basement...purchase stock in smart metering device maker.

Another will be power bill payment subsidies and grant support for elderly and the poor. Call it what you want - power welfare or alms - woe to the politician who opposes it on philosophical grounds during a freezing winter or sweltering summer.

This is happening just as the cost of solar panels is starting to go down, driven by more solar silicon capacity coming on line and more cost effective manufacturing technologies. The sales of rooftop systems is going to really take off. All the planets are lining up on this one.

Five billion dollar nuclear power plants and all the clean coal high tech stuff will generate a lot of opposition when taxpayer power bills are skyrocketing.

States with a high reliance on hydroelectric power, Washington and Oregon come to mind, gain a huge advantage in the economic development field.

The price of climate exactly does that argument get made?

Finally, the very idea of deregulation will lose appeal. Could even go the other direction? Which would take all the bets off the previous points made.

Image credit::Solar Power Rocks, De-mystifying your PG&E; Solar Power Bill

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