Republicans can stop yammering about utility rates anytime now

Here’s a little shock to the system. Vermont’s own Green Mountain Power has some of the lowest electricity rates in New England. GMP has the second-lowest residential rates of any regional utility, the third-lowest commercial rates, and the absolute rock-bottom lowest rates for industrial customers.

New England industrial electric ratesYou know how the Republicans are always complaining about the high cost of power and how it’s forcing businesses to flee? Well, it’s horseshit, and they need to cut it out.

The data comes from the Edison Electric Institute, so don’t try to tell me somebody’s got their thumb on the scale.

It’s true that Vermont has relatively high power rates compared to the rest of the nation, but that’s because of built-in structural disadvantages for all of the Northeast, not because of excessive regulation or our green power policy. Indeed, it’s a testament to GMP management that it’s kept rates so low while moving aggressively toward a renewable future. It would also appear that Vermont’s regulatory structure is a lot smarter than it’s given credit for.

A couple more points need to be made.

First, those controversial Renewable Energy Credits? They work! They’re doing what they were designed to do: allow buildout of renewables while keeping in-state prices low. Sure, we’re losing the on-paper advantage of the credit, but we’re doing the most important thing: actually building renewables without putting an undue burden on the economy.

Second, utility rates are simply not that big a factor in business decision-making. The Boston area has incredibly high prices, and yet its economy is doing extremely well. Other factors play a much larger role in siting decisions. In Boston, it’s the presence of a thriving research and entrepreneurial community.

If we want to further encourage business expansion and relocation, we should stop worrying about electricity rates. We’re doing very well regionally, and we’re doing the best we can nationally.

And yes, the Republicans should stop trying to exploit this nonexistent issue and instead focus on ideas that could actually help our economy grow.

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9 thoughts on “Republicans can stop yammering about utility rates anytime now

  1. Kenneth Johnson

    The chart is deceptive, at least for our experience. We are an industrial user with both normal work week production and a 24/7/365 drying process in a moderately horsepower heavy industry with ebbs and flows in demand (sawmill). When you take our total electric bill and divide it by the total kwh used, we end up varying between 14 and 16 cents per kwh. By that rough measure April was 14.2 cents per kwh. There are peak and off peak demand charges and power factor charges and so forth that add up quickly, and the rate is being changed again soon. Our overall cost is far above the stated 9.8 cents.

    Reply
    1. ApacheTrout

      Are you getting charged commercial rates? Your 14.2 cents would be in line with the average commercial retail rates shown in the second chart you see when clicking on the link.

      Reply
    2. johngreenberg

      Kenneth Johnson:

      Retail rates charged by all utilities include more than the cost of power, whether you’re an industrial, commercial, or residential user.
      Unless you’re suggesting otherwise — and that’s not how I read your comment — the chart accurately (and not deceptively) reflects the costs the utilities shown charged for power. And unless all the other utilities charge less for the additional items you mention “peak and off peak demand charges and power factor charges and so forth.” the chart correctly reflects relative standing as well.

      Reply
      1. kdjvt

        I think you make some good points. However, I still feel the chart leaves significant data out. Utilities change their rates all the time and I have no idea how much other utilities charge for demand. On our last bill the kwh charge for peak power was 9.552 cents per kwh for $9,300.88. The peak KW demand charge was $18.572 per KW for $8,970.28. As demand represents half the bill, I’m not yet convinced that the kwh charge provides a good, broad representation of what a customer will pay for power for their business. Where we are in VT we are close to NY State, where industrial power costs are lower. We naturally feel that we pay extra for power compared to companies not far away geographically. For other parts of New England, costs appear to be higher, based on the partial information available.

  2. Walter Carpenter

    “Well, it’s horseshit, and they need to cut it out.” They won’t, of course. It is not the facts that matter, but the emotional fear-mongering.

    Reply
  3. Doug Hoffer

    According to the Economic Census, the cost of electricity as a percentage of total costs for manufacturers ranges from 0.5% to 2.5%. Therefore, even at the top end, a rate that is 20% lower would actually only save 0.25%.

    Reply
  4. NanuqFC

    One odd thing about the chart is that the las company listed, United Illuminating, has a cost listed at 15.62 cents per kwh; the bar on the chart is nearly identical to the company listed above it (Boston Edison) is listed at 17.59. Cambridge Electric at 15.45, barely lower than United Illuminating, has a bar much shorter than the one shown for United Illuminating’s 15.62. So is the bar wrong or the number wrong?

    And what implications might that have for the accuracy of the chart as a whole?

    I’m very receptive to the argument, just asking in order for the presentation of information to be as accurate as possible.

    Reply
    1. Roger Fox

      The Vermont Business Magazine source data (per the link included in the blog post) indicates that this confusion is due to a basic data entry error in the UI bar chart label: in the list below the bar charts, titled “Source: Edison Electric Institute, FERC Form I”, UI’s industrial rate is shown as 17.71 c/kWh, which is consistent with the relative length of the UI bar in the chart. All of the other rates in that list are the same as the respective rates shown in the bar chart. I couldn’t find any clue in the VBM data about the origin of the apparently erroneous “15.62” label.

      Reply

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