Report: Indiana Electricity Rates Could Rise 12 Percent

by ekramer on January 5, 2010

A research group in Indiana is predicting the state’s electricity rates could rise 12 percent over the next four years. WFPL’s Elizabeth Kramer has more.

The news comes in a new report [pdf] from the State Utility Forecasting Group based at Purdue University. It projects the increase coming by 2013 as coal-fired power plants begin operating with more stringent controls. These plants release large amounts of carbon dioxide and provide the state with about 95 percent of its power.

Douglas Gotham is the director of the group. He says the report also shows recent decreases in electricity use.

“Demand for electricity in the last couple of years has dropped off a little due to economic factors,” Gotham says, “but measures that utilities have taken in recent years and in the process of taking for future requirements are all included in our modeling system and that’s actually one of the major drivers for that price increase.”

The recent declines in electricity use is mainly due to the economy, says Gotham.

“Plants either shutting down or cutting back on production cause them to use less electricity,” he says. “You see the same thing as businesses close down. The other thing that we’re seeing is people are using electricity more efficiently which brings demand down.”

He says that electricity use will most likely increase as the economy improves.

Gotham says the report does not take include the impact of stricter federal environmental guidelines on carbon dioxide emissions that Congress is considering.

“Given our reliance on coal in the state of Indiana right now, cap-and-trade legislation will have a significant impact on prices,” he says. “Prices will go up, but there’s a lot of uncertainty over the details.”

The report looks at the state’s energy needs between now and 2027.

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