Rate hikes help cut power use in western states

Wednesday, August 08, 2001 04:25 PM ET

By Nigel Hunt

LOS ANGELES, Aug 8 (Reuters) - Whether prompted by rising prices, blackouts fears or saturation media coverage of a long neglected industry, consumers in much of the U.S. West are paying keen attention to their power bills.

Utilities in several states are reporting that consumers are cutting back on their power use, with the biggest cuts seen among those whose wallets have been hardest hit by the crisis.

"We've had conservation of about 10 percent," said Sue Veseth, spokeswoman for municipal utility Tacoma Power, noting the drop was partly in response to a 50 percent surcharge on bills imposed late last year and due to expire on October 1.

Veseth said conservation was evident "throughout our system" with residential, commercial and manufacturing customers all cutting back. Tacoma Power is a municipal utility in Washington state.

Customers of California's three investor-owned utilities have had a double incentive to cut back, with higher prices providing the stick and a 20 percent rebate for customers able to cut usage by 20 percent serving as the carrot.

Figures issued by the California Energy Commission show that loads have been running below last year with savings peaking in June at 10.6 percent when adjusted for weather and 8.4 percent in terms of actual load.

A slight drop-off in savings last month to 3.5 percent and 4.3 percent, respectively, however, had triggered some concern about the threat of complacency with the state not experiencing any rolling blackouts since early May.

California Gov. Gray Davis has cited conservation as a key factor in helping the state avert blackouts so far this summer. A chronic power shortage has resulted in rolling blackouts six times so far this year, most recently on May 8.

Oregon utility Portland General Electric said it saw residential customers cut usage by 4.7 percent in the first half of this year, manufacturing customers by 3.1 percent and commercial customers by 0.4 percent, all weather adjusted.

Customers of PGE, a unit of Enron Corp (ENE, news). , have not yet faced increased prices. A spokesman said however they made have been influenced by a "perception" of higher prices with a rate hike anticipated in October.

MEDIA IMPACT

He also said customers may have been reacting to media reports of possible power shortages while the utility had also sold off a small part of its service territory.

Idaho Power spokesman Russ Jones said the utility saw around a 9 percent drop in residential demand in June on a weather-adjusted basis while commercial and industrial use had remained flat.

The decrease followed a rate hike of about 30 percent for residential customers in May. Jones also cited media coverage as a key factor in the decline.

"We believe that there is some impact there because of the media coverage. We have also been running ad campaigns, trying to get out the conservation message," he said.

The utility, a unit of IDACORP Inc. , said the largest decrease came from its irrigation customers where it had run a "buy back" program paying farmers to cut usage.

Jones said agricultural usage was down around 27 percent.

Consumers in Colorado have been largely shielded from the region's energy crisis with no price increases and little threat of blackouts.

Steve Roalstad, a spokesman for Xcel Energy (XEL, news) Inc. said its Colorado service territory has seen around a three to four percent rise in consumption with a new record use of 5,757 megawatts set on July 30.

He noted, however, that Cheyenne, Wyoming, has been added to the territory since last year and when adjusted for that city's inclusion the rise only around "one percent or so."

The utility has been running various programs to encourage conservation and Roalstad said the rise was modest by recent standards. It has seen load growth of around 17 percent during the last 10 years.

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-- Martin Thompson (mthom1927@aol.com), August 08, 2001

Answers

Ah, ha. Presto. The time-honored economics Law of Supply and Demand is at work.

-- Billiver (billiver@aol.com), August 09, 2001.