HOUSTON, March 7 Electric power bills are likely
to rise across the United States as utilities spend billions to
replace aging infrastructure, add costly renewable resources and
install pollution control devices to clean up older power
plants, industry executives said on Thursday, the fourth day of
the IHS CERAWeek energy conference in Houston.
Pressure on electric rates, which have been stable or
falling in recent years, is building even as utilities increase
the use of natural gas to generate electricity. Natural gas
prices are near their lowest levels in a decade.
James Rogers, chief executive of Duke Energy, the
nation's largest utility, said asking regulators to raise rates
can be hard to justify from the customers' outlook, citing a
recent rate increase sought by one Duke utility to cover new
power plant construction.
"From a customer's perspective, the lights are still the
same," said Rogers. "When they turn the TV on, it is still the
same, yet the price of electricity is going to go up and they
don't see that the new plants are much cleaner and there's an 18
percent reduction in our carbon dioxide emissions. They don't
see that impact."
Anthony Earley, chief executive of PG&E Corp, said
all energy companies must talk more about the need to invest in
energy infrastructure for safety, reliability and as a way to
"A lot of infrastructure is getting to the end of its useful
life," Earley said. "Given our experience with the San Bruno gas
explosion, we are the poster child for making sure you invest in
infrastructure. This is not optional."
Eight people were killed in September 2010 when an aging,
30-inch natural gas pipeline owned by PG&E's gas utility
exploded in San Bruno, California, a San Francisco suburb,
destroying 80 homes and leaving an 40-foot crater. The
pipeline's age was cited as a factor leading to the blast.
California utilities face the cost of meeting the mandate to
supply 33 percent of the state's electric supply in coming years
from renewable resources, like wind and solar power, Earley
"Some of the early contracts were very expensive and those
projects are just now coming online," Earley said. PG&E's
renewable contracts will likely add 1 percent to 1.5 percent to
utility bills, over and above the inflation rate.
Earley said some long-term contracts the utility signed for
renewable resources were above $200 per megawatt-hour. Those
projects are now being completed and costs for the power will
begin showing up on customer bills.
"That's going to create some issues for us," Earley said.
State regulation of electric rates developed when electric
demand was growing every year does not work in the current
climate where demand is not rising - due to a stagnant economy -
but monthly bills are, the executives said.
Utilities need rate policies that are not based on rising
consumption by homes and businesses.
"Energy efficiency is the cheapest form of energy, but when
you try to describe to customers that we make electricity, we
distribute electricity and we try to sell them less, customers
don't understand," said John Russell, president of CMS Energy
Corp, a Michigan-based utility.
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