Utility Rates Surge Around the U.S.

It was once believed that de-regulation would lead to greater efficiency and improvement of aging infrastructure -- new plants, more transmission lines and better service. But that hasn't happened either, due to the high costs of building such infrastructure, combined with the NIMBYism of many Americans who don't want power lines and power plants being built across their neighborhoods. These factors provide little incentive for power producers who can increase profits with the infrastructure they already have.

"This was supposed to promote the construction of new power plants. Well, that hasn't happened," says Mark Crisson, president and CEO of the American Public Power Association, a nonprofit group that represents local public utilities. "All it does is transfer money from the consumer to these 10 or 12 companies that have been doing very well in recent years."

Crisson predicts more pain ahead if nothing is done to alleviate the rapid increase of electricity prices in dozens of deregulated states. The trend could hurt utilities, which are coping with high commodity costs, as well as promises of stricter emissions regulation from lawmakers and both presumptive presidential candidates.

"If prices get too high, you don't just have price response you have demand destruction," Crisson says. "Companies start to shut down, customers can't pay their bill, it starts having a major drag on the economy -- it's just no good."

While the Energy Department predicts that electricity prices will peak in 2009 at 9.3 cents per kilowatt hour, there are no guarantees. Its projections have assumptions about commodity mix, renewables, costs and infrastructure that, of course, aren't certain.