Supply, Demand, and the Price of Electricity
“Xcel Energy reported a 17 percent jump in earnings per share for the third quarter, but warned that electricity sales remain slack, and that it will seek a Minnesota rate increase.”
—Star Tribune (10/26/2012).
OK, so it’s been 30(!) years since I studied economics in college.
And I do know that Xcel Energy is a regulated utility.
Still, isn’t the appropriate response to slack demand to lower rates?
Now, if the headline read, “Robust Demand Signals Need for a Rate Hike,” it would make sense to me.
P.S.: Also militating in favor of a drop in electricity rates vs. an increase: the cost of natural gas — a key input for electric utilities — has collapsed due to so-called “fracking” and other drilling advances.