Posted by
Jay Kern on Thursday, January 31, 2008 10:42:47 PM
Here we go with yet another time bomb waiting to go off in Pennsylvania. And this one truly has NO good solution.
In 2010, the price caps imposed by the state upon the suppliers of electrical energy are due to be removed. What this means for the average home-owner is an increase in that year of 30%-35% on their monthly electric bill. (And that percentage looks to be conservative if Maryland's experience is any guideline. Their rates went up 70%-80%.)
This entire issue is one of those 'unforeseen' expenses due to the state legislature's unwillingness to address a potential problem at the start. De-regulation is generally a very good thing. It lowers costs on many things in the economy (although not all). In effect, it allows the free market to work. However, when the state 'de-regulated' electricity, it still left price caps in the mix. It's hard to allow people to 'shop' for their electric supplier when every one of them is limited to how much they can charge. At the same time, these price caps undermine the stability of those suppliers of electricity. How long could you stay in business if it cost you $1.00 to make whatever you were selling, but the state only allowed you to sell it for fifty cents? That's where we are right now with the electricity supply here in Pennsylvania. When the price caps go off in 2010, there are going to be two options. The price of electricity sky rockets, or the legislature re-imposes price caps and the suppliers go bankrupt which results in a massive bailout. Either way the tax payers are going to take a beating.
This is one of the reasons why the big push towards ethanol and some other alternative forms of energy is a bad idea at this point in time. While not discounting certain alternative options, coal and uclear are much better options at this point. Yes it looks good on TV to 'care about the environment', but the reality is a mugger waiting in the shadows to steal old lady prosperity's pocketbook.