Electric rates favorable in South Dakota

Electric rates favorable in South Dakota

	Published : Mon, 30 Apr 2007 20:47 By : Agencies Print this Story

PIERRE, S.D. (AP) - South Dakota has some of the lowest electric rates in the nation, but the era of cheap energy may be coming to an end, state Public Utilities Commission Chairman Dusty Johnson says.

Unfortunately, electric rates in South Dakota and elsewhere are entering a time when they may increase substantially because of environment regulations, Johnson said.

'Most people believe that Congress will pass some form of carbon regulation in the next few years, and even the most moderate of those proposals would increase the price of power from coal by more than 50 percent,' he said.

Electric rates also will be pushed up by the growing need to build more power plants and transmission lines, Johnson said.

Residential electric rates in South Dakota averaged 7.9 cents per kilowatt hour last year, Johnson says. The national average was 10.4 cents.

Current prices in South Dakota would not be so favorable if state officials had jumped on the electric deregulation bandwagon nearly a decade ago, he said.

Sixteen states instituted deregulation, and consumers in those states wound up paying much higher rates for electricity than those who live in states that continued to regulate their power industries.

'For deregulation to work, you need to have competition,' Johnson says. 'Without strong competition you don't have a free market. You have a monopoly. I don't see South Dakota being able to support the two, three or four electric companies that would be needed to have true competition.'

Electric rates in South Dakota are the lowest in a decade when adjusted for inflation, decreasing 3.3 percent in real terms since 1996.

Johnson says one reason for the low rates is that 22 percent of the power used in the state comes from hydroelectric dams on the Missouri River.

'That is inexpensive power, and I wish we could get access to more of it,' he says. 'Almost 80 percent of the hydropower created at those dams is shipped to other states, and those allocations made by the federal government are extremely unlikely to change.'

Another reason for less expensive power in South Dakota has been its avoidance of government mandates and taxes that other states have put on utility companies, Johnson says.

'The PUC has not attempted to micromanage the operations of the utility companies and instead have allowed them to make smart decisions,' he says.