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Power Markets

Power Markets

Perhaps you have heard reports of electricity price spikes as high as $7,000 per megawatt-hour in the Midwest this summer. The average price in that wholesale market is $30 per megawatt-hour. This is the first time markets have reacted so unpredictably since the wholesale electricity market was opened to increased competition by the Federal Energy Policy Act of 1992 . Some utilities have called on federal and state regulators to look into the events that led to this price volatility. A number of utilities have asked the Federal Energy Regulatory Commission (FERC) to set a price cap of $100 per megawatt-hour to avoid similar market turmoil. The FERC is also looking into whether any utilities contributed to the problem and whether there were any attempts to manipulate prices.

The following scenario may help put the situation into perspective. If power were to cost $100 per megawatt-hour, the average Douglas County homeowner's annual power bill would be $2,400. At $7,000 per megawatt-hour, that annual power bill would total $168,000! In reality, the average residence in Douglas County paid a little over $500 for electricity last year.

Utility representatives and electric industry personnel are discussing various remedies to avoid market spikes and provide reliable low cost electricity. Douglas PUD has observed abnormally high "spot-market" prices for wholesale power in the Pacific Northwest in recent weeks. However, Douglas PUD is working hard to avoid the problems experienced in the Midwest and California. So far, these events haven't affected the residential and small business customers in our Douglas County community. It is important to remember that in Douglas County, your electricity continues to be supplied primarily by Wells Dam and is delivered to you at cost-based rates established by the Commissioners that you elect locally