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Extended drought, fossil fuel energy shortages and environmental restrictions on the construction of new electricity generators all spell trouble for reliable electricity service. Add in the United States stressed electricity distribution systems, aging base load generation plants and increased demand for electricity, and the nation can choose any one of several factors to blame for high electricity costs.

And when electricity demand exceeds supply, the result is a lesson out of Economics 101.

If our demand is outstripping our supply even at the current pace, we will need 1,900 power generating plants to keep up with demand by 2020, said Mary Matalin, a top advisor to Vice President Richard Cheney.

The North America Electric Reliability Council, an association formed to promote the reliability of the interconnected electric system in North America, had not yet released its projections for the summer months as this issue went to press. But in general, expect higher costs and less reliability.

The U.S. Department of Energys Information Administration (EIA) has estimated that the national average price per kilowatt hour will be about 8 cents by the end of the year and increase another half cent in 2002. And over the next 20 years, U.S. electricity demand will increase 54 percent.

American consumers are facing increasing cost and reliability problemsas the IBEW predicted long before the California crisisand claims of deregulations proponents that open-market competition would lower electricity prices are just plain wrong.

(Next month: a look at the effects of deregulation in Canada)...........

In this first of a two-part series, the Journal looks at the immediate impact of electrical utility deregulation in the United States and Canada.

Part 2

Energy woes vary by region in the United States.

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