From yesterday's WSJ Morning Brief ($):
U.S. electric customers are experiencing some of the largest price increases in decades, and Cambridge Energy Research Associates says the main cause is the rising cost of input fuels. The energy-oriented think tank predicts the 2005–06 time frame will bring in the biggest fuel cost increases in history for the power industry, and argues that understanding "price shock" is key to understanding the future path of the U.S. power business. "Although policymakers may seek to treat price shock as a short-run problem, the policies they establish in response will have long-term, fundamental impacts," CERA says. It adds that the long-term consequences of price shock will include the phasing in of rate increases over time, "a likely response that may take the edge off for residential consumers, but will increase regulatory risk for power firms." Also it expects increased interest in energy efficiency and load management, as consumers and regulators search for ways to mitigate rising prices.
