Deloitte Survey Finds Electricity Costs Will Go Up, But Consumers Strapped

June 7, 2010

A recent survey by the Deloitte Center for Energy Solutions shows that 85% of state energy regulators (35 state utility commissioners polled between April 14 and May 10, 2010) expect the cost of residential electricity to increase in 2011, but they fear rate increases will be financially onerous on the public. 34% felt consumers would not accept any rate increase at all, a 11% increase from 2009; 34% said the public would accept a 5% rate increase, down hugely from 53% in 2008.

This clearly shows that state regulators are quite realistic on cost increases and equally aware of what impact it could have on consumers.

According to Branko Terzic, energy and resources regulatory policy leader for Deloitte,
“Our survey demonstrates that state utility regulators are increasingly cognizant of electricity costs and the burden they represent on the average consumer.”

And why should costs increase?

66% attribute it to rising environmental costs, and 49% say it will be linked to capital costs.

Could renewable energy be the solution?

Actually not so. 69% feel ‘high prices to consumers’ is a leading barrier to more renewable energy, compared to 58% in 2008. So much higher today.

Another concepts that is slowly getting into the public consciousness is smart metering, which allows consumers to decide their consumption based on prevailing electric costs.
60% were considering ‘time-of-day’ rates for their rate payers, and 83% believed that this option should be strongly considered as a way for consumers to save dollars by modifying their usage.

Nuclear power still popular, the survey finds – 46% ranked new nuclear power as being ‘extremely effective’ in the reduction of carbon dioxide emission, well ahead of renewable power sources (17%).

Terzic also commented, “This year’s survey shows that 61.8 percent of commissioners feel that carbon capture and sequestration is extremely or moderately effective, up from 44 percent last year — and ahead of renewable power sources, which scored 40 percent using the same criteria.”

“The bottom line,” he concludes, “seems to be that regulators are open to a number of options to address concerns like greenhouse gas emission, but they want to make sure the public is not asked to take on overly burdensome costs. The real question is how these priorities will change as the economy begins to improve.”