As energy prices climb, how high is up?

During the past year, the New York Energy Consumers Council (NYECC) has been aggressively working to minimize your energy cost escalation, and we have had a very positive impact.

Without our intervention, energy consumers in Con Edison's service territory could now be facing new and incremental energy bill increases well in excess of $1 billion. Although next year is still nearly six months away, you may want to begin considering your specific energy budget requirements for the coming year and how to cut them.

More than ever, individual customer patterns of use will shape the size and exposure of their total budgetary increases.

Steam customers who only use steam for heat and high water will continue to see bigger increases than those who also use steam to meet their cooling needs. Customers who can curb their electric consumption on hot summer afternoons will save more than those who remain captive to their air conditioners' appetites for electricity.

During the past twelve months, the New York State Public Service Commission has approved increases in Con Edison's base rates for steam, natural gas, and electricity consumed or delivered to their customers, and most customers should expect to pay more for the delivery of each of these commodities.

In addition, however, the electric rate increase approved by the PSC also includes a provision that directs the New York State Energy Research and Development Authority to work with Con Edison (and other active parties in the rate case proceeding) to develop demand side management programs to secure 300 megawatts (MW) of demand reduction during the next three-year interval. Program deployment is anticipated before the end of 2005, and its impact will begin to appear on customers' bills by 2006. These programs are expected to make $244 million or more of ratepayer money available for a broad range of demand side management initiatives.

In today's deregulated market, however, much energy expense remains outside the window of regulatory certainty:

* The rapid growth in China's demand for fuel oil and the political unrest in the Mideast, as well as increasing and competing domestic demand for energy, continues both to erode supply and drive prices sky ward.

* Ever increasing demand for electricity--particularly during peak periods--is continuing to push prices higher for both the capacity and the commodity components of those costs. With no significant new generation or transmission assets anticipated, the increased demand on a constrained supply is likely to push the retail price of electricity progressively higher for at least the next several years.

* Increasing state and federal environmental regulations will continue to impose requirements that will translate into higher energy production costs, which must translate into higher energy procurement prices.

Customer implementation of technical innovations and management strategies to increase their capability to respond to rapid market changes becomes increasingly important in this dynamic era.

For information on the NYECC and its potential to help consumers navigate these unknown waters, call the Executive Director, David F. Bomke, at 646 473 1419 ([e-mail])