NCPA - National Center for Policy Analysis

Consumers Likely to See Higher Electricity Bills under New Regulations

June 16, 2011

Consumers could see their electricity bills jump an estimated 40 to 60 percent in the next few years.  The reason: Pending environmental regulations will make coal-fired generating plants, which produce about half the nation's electricity, more expensive to operate.  Many are expected to be shuttered, says the Chicago Tribune.

  • The increases are expected to begin to appear in 2014, and policymakers already are scrambling to find cheap and reliable alternative power sources.
  • If they are unsuccessful, consumers can expect further increases as more expensive forms of generation take on a greater share of the electricity load.

Exactly how much bills will go up is unclear.

  • What analysts know is that a portion of ComEd bills that pays electricity generators to reserve a portion of their power three years into the future will increase more than fourfold.
  • That would translate into increases of $107 to $178 a year for an average residential customer in ComEd's territory (Chicago and most of northern Illinois), starting in 2014.
  • In 2014 those so-called capacity costs are expected to add approximately $2.7 million over the previous year to electricity bills in Chicago Public Schools, $3.3 million for the Metropolitan Water Reclamation District and $5.4 million to the city of Chicago.

Coal-fired plants historically have been one of the cheapest ways to generate electricity, but operating costs are expected to increase significantly because of upgrades needed on older plants to meet new environmental regulations.  The Illinois Power Agency estimates that by 2017 the energy portion of bills could jump 65 percent from today's rates, says the Tribune.

Source: Julie Wernau, "Consumers' Electric Bills Likely to Spike as Coal Plants Close," Chicago Tribune, June 11, 2011.

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