- Public backlash over rising electricity bills is growing.
- New York targets utility oversight and consumer protections, while Georgia’s response has been limited, despite clear voter dissatisfaction and mounting political pressure.
- U.S. electricity rates are likely to rise above inflation due to grid upgrades and growing data center demand—with consumers, not tech giants, expected to bear the bulk of the costs.
Two swallows do not a summer make. Well, okay, Aristotle didn’t put it that way, but we are betting that a lot of utility investors are hoping so. Here’s what happened on the same day. Two news stories. USA Network, the Gannet news service, reported that the N.Y. State legislature is not just looking at rising electricity rates, but they are legislating. Eight bills passed by the Senate and on their way to the Assembly, calling for the designation of an additional Public Service Commission member as consumer advocate (weren’t all the members supposed to protect consumers?), requiring the utilities to give refunds if they exceed allowed returns (any reimbursement for utilities when they don’t earn the allowed return?), allowing the PSC to consider stress suffered by consumers when the power fails due to utility misconduct (make work for psychologists?) and lengthening the time the PSC can take to make a decision to 14 months (justice delayed is justice denied?).
While the proposed legislation seems aimed more at symptoms than underlying causes, there is a serious problem. New York’s electricity rates are the eighth highest in the nation (they have been high for decades—nothing new), 1.2 million gas and electric customers are at least two months behind in their bills, and the utilities are looking for double-digit percentage increases. Maybe the legislators should have acted sooner.
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The second story (NY Times) says that Georgians have become angry about high electric bills (Georgia rates are in the middle of the pack) and this anger might just affect the voting for public service commissioner this year. The story says that the PSC has approved six rate hikes for Georgia Power in two years and bills have risen 33% as a result. The head of the state senate finance committee tried to introduce legislation to set up an advocate to represent consumers in court actions and to get data centers to pay more for electricity, but got nowhere. Georgia’s governor signed a three rate year freeze agreement with Georgia Power, which seems like a case of locking the barn door after the horse is stolen. Georgia Power’s cost escalation can be traced to its enormously expensive Vogtle nuclear project (completed at three times its original cost estimate), which had the wholesale support of the PSC through thick and thin. The big question in Georgia is whether consumers are angry enough to elect Democrats to the PSC, which has not had one since 2007.
As we have argued before, electricity rates in the US will rise at an above-inflation rate for years to come to pay for rehab of a neglected system and to pay for facilities to serve growing demand. Prices will rise not because greener plant is more expensive, but because all new plant is more expensive. Furthermore, the expected demand from data centers will require a stronger networ,k and somebody will have to pay for those extra upgrades. Who, the well-connected and enormously rich internet companies, or the consumer? Given the current state of politics, we’d sooner bet that the consumer will get stuck with an inordinate percentage of the bill than the party actually responsible for the cost increase. If we are right, expect a lot more news stories about rising electricity bills and the political consequences thereof.