Despite California`s ongoing energy woes, many states are continuing to move toward deregulation of their electric utilities - a trend that will encourage more economic investment in new plants but also cause significant fluctuations in the price Americans pay for electricity in the next decade, according to a study released this week by Stanford`s Energy Modeling Forum (EMF).
The new study follows an EMF report published three years ago that foreshadowed the current California electricity crisis.
``More and more states have begun to restructure their utilities, while trying to avoid the policy mistakes that contributed to the California disaster,`` says Hillard Huntington, executive director of EMF and coordinator of the new study.
The nationwide trend toward restructuring will push electricity prices upward in some parts of the country and pull prices downward in others - a result of regional differences in demand, natural gas prices, transmission capacity and other market conditions, according to the study.
``States that generate electricity from hydropower, coal or lower-priced fuels will see their generating capacity increase as they try to meet internal demand while continuing to export power to other states,`` Huntington says.
``These adjustments to market conditions will place additional pressure on prices in these states,`` he adds. ``Conversely, those states whose generation is based upon gas and higher-priced fuels will look to reduce their costs by importing more electricity from less-expensive states.``
Market conditions
The new study is based on a comparison of estimates from five major economic models of electricity markets in the United States and Canada. Although the estimates vary by model, all show a substantial range of prices under different market conditions.
For example, the study estimates that the national wholesale electricity price in 2010 will be 7 to 17 percent higher if electricity demand grows by 2.6 perce
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Contact: Mark Shwartz
mshwartz@stanford.edu
650-723-9296
Stanford University
13-May-2001