Wednesday, August 20, 2008

High Electric Rates-All is now well with an OLR report

Why does Connecticut have high electric rates? I read with curiosity the 8/5/08 report issued by the OLR regarding Connecticut having the second highest electric rates in the country. As an economics instructor I found the reading to be difficult, laborious and for the common person they will not be able to understand its technical jargon. Thus I would like to develop with more simplistic terms why electric rates are so high in our state. First, as far as I can see Connecticut generates very little actual electricity as it use to. The deregulation of the industry created small peak power plants with most of our basic everyday needs for electricity being bought on an open market grid from outside of the state. This is automatically more costly since electricity is now transported rather than produced in our state. These small peak power plants operate only when there is a high enough demand for them. The cost of producing this electricity is expensive and is profit driven by the companies that run them. My immediate suggestion here is to build two nuclear power plants to replace the old Millstone plants and generate the bulk of our power in the state through nuclear which is clean and cost effective and efficient. I no longer see from either a business view or an economic view why United Illuminating and or Northeast Utilities are still in business and why they are allowed rate increases since they generate little if any electricity any more.
Demand plays a small factor in the high costs of electricity. As we continue to see a grave economic decline in our state electric demand remains flat with high demand being generated in heat waves (more air conditioning being used)and thus the peak plants go to work and electric costs increase due to this. Also due to stringent air pollution laws electricity must be created in a "clean" manner and thus is much more costly due to the high costs of natural gas.
The state legislature with our tax dollars have passed three separate bills to improve electric efficiency for businesses and home owners, to help build more of these peak power plants and to provide assistance for those in need. These bills in my economic opinion have done little to help either businesses or consumers in the state or to lower electric rates. This is also an example of why the state legislature has no understanding of how our economy works or why Connecticut is in the economic mess that it is in today.
The solution to this problem without this OLR report is to build two or more nuclear power plants in Connecticut immediately. Nuclear power in 2008 is non polluting, cost efficient and highly efficient. It would help lower electric rates in our state, create jobs and help promote economic growth to a state which is badly managed from a taxpayers point of view. However my proposal may be too logical for the self serving, special interest peddling state legislature here in Connecticut.

No comments: