BPU seeking better way to buy electricity

NEW JERSEY - The Board of Public Utilities voted to have its staff explore alternatives or modifications to its annual electricity auction after this year's bidding resulted in sharp rate increases for state residents.

The decision comes six weeks after the BPU approved results from this year's auction. It resulted in rate increases between 12 percent and 14 percent for customers of the state's four electric utilities.

For typical residential users, that means that starting in June the average monthly electric bill will be $10 to $13.50 higher than last year.

The Internet-based auction, which was started in 2002, is used to meet the electric demands of customers who have not selected an alternative electric supplier which has come to mean nearly every residential customer. When the auction was approved in 2001, many customers were expected to switch from the dominant utility in their region to what was expected to be lower-priced alternative suppliers.

That hasn't happened, so each of the four electric utilities continues to supply nearly all the customers in their regions, with rates partly based on the price of power they purchase at the annual auction.

Even as it sought possible changes, the board said that "the auction has been found to offer the most effective method of bringing the advantages of a highly competitive wholesale electric market to the retail customer."

When results were announced in February, the BPU said they "reflect increasing costs in our world energy markets, especially in natural gas" and "are driven by growing international energy demand and supply constraints that were exacerbated by the impacts of Hurricanes Katrina and Rita."

The rates are "the best possible in light of current market conditions and compare favorably to some (nearby) states," it said.