Electricity bills fall as cheaper natural gas lowers rates

— -- Here's a bright spot in an ailing economy: Electricity prices are falling in many areas.

The sharp drop in natural gas prices and, to a lesser extent, oil prices is slashing electric rates across big swaths of the USA. Utilities in the Northeast, Texas, Florida, the Mid-Atlantic and California rely heavily on natural-gas-fired power plants to generate electricity.

"In those regions, rates will come down with the price of gas," says Bernstein Research analyst Hugh Wynne.

Natural gas prices have plummeted as the anemic economy has dampened consumption. Also, natural gas resources jumped this year as producers found ways to unearth fresh supplies embedded in shale rock.

Of course, the rate cuts are coming after big fuel-related increases last summer. Fuel costs can make up as much as 50% of a utility bill. Among the decreases:

Con Ed, which buys all of its electricity on the wholesale market, gets about 43% of it from natural-gas-based generators and 6% from oil-fired plants.

•In Texas, electricity retailer First Choice Power says bills for customers whose rates vary month-to-month were 40% lower in November than last summer. "It's the lowest price we've offered this year," spokeswoman Catherine Carlton says.

•Tennessee Valley Authority President Tom Kilgore told his board last week that the company plans to reduce electric rates by an unspecified amount in January because of falling natural gas and oil prices. The power wholesaler, which boosted rates 20% last month, sells electricity to utilities that serve 9 million customers in the Southeast.