Paying More to Flip the Switch
Consumers will pay more for electricity, but the power will be there.
May 18, 2007 — -- It's not just higher gasoline prices that will take a bite out of Americans' pocketbooks this summer. Electricity bills will, too.
Earlier this month, the Energy Department reported that all those air conditioners being used to lower the temperature will raise electric bills by 2.6 percent this year.
But the nation's power companies will be able to meet the demand, according to recent reports from the government and energy regulators.
The Federal Energy Regulatory Commission announced on Thursday that it predicts energy demands will be lower compared to last year when intense heat waves throughout large portions of the United States lead to record use of electricity.
Electricity prices will be higher, however, because natural gas prices have been higher. Natural gas generates nearly 19 percent of the nation's power. Coal-fired power plants generate nearly half of the nation's electricity.
"Natural gas is the most significant price setting fuel in the U.S. for electricity," said Celeste Miller, a spokeswoman for the commission.
The FERC forecasts that peak demand for electricity will increase in Texas, the South and the Midwest. It projects lower peak energy loads in those regions that saw record demand during last year's heat wave. Those areas include California, New England, New York and parts of the mid-Atlantic.
The North American Electric Reliability Corporation, the organization that sets mandatory standards for the electricity industry, said Thursday that it also expects electricity demands to be met this summer.
In its 2007 summer assessment, the NERC forecasts peak energy demand will be 1 percent lower compared to last summer.
But a lot will depend on the weather.
"If areas of North America experience extended periods of extreme weather this summer, utilities may need to implement emergency procedures to reduce customer demand," said Rick Sergel, president and CEO of the organization based in Princeton, N.J.
Both the FERC and the NERC anticipate that Southern California, as in previous years, will be strained this summer. The NERC forecasts a 3 percent chance of blackouts in the region.
