Electric prices are going up significantly in pares of central Maryland as two large local utility companies are raising rates.These two companies service the Baltimore metro area, the Maryland suburbs of Washington, DC and some surrounding rural counties.
- Baltimore Gas and Electric Co. is raising rates by 72%* (yellow on map)
- PEPCO is raising rates by 38.5%* (green on map)
See this Washington Post article. For example in a townhouse (1800 sq. feet) I share with a few friends (we rent) we pay on average 200$ a month for electricity (we use electric for heat and AC). With the 38.5% increase we are facing 280$ average monthly electric bills. Or almost an extra $1000 dollars a year.
People are hurting due to the increased costs. The great American consumer squeeze is accelerating.
Posts
The real story is in the Post business section this AM.
ReplyDelete"A greater proportion of mortgage refinancers tapped their home equity for cash in the first three months of this year than in any other quarter in the past 15 years, according to an analysis released yesterday."
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/02/AR2006050201606.html
Gas prices....UP
ReplyDeleteElectric Utility bills....UP
Mortgage Rates....UP
Interest Rates for the entire economy....UP
Consumer Confidence....WAY DOWN
It's going to be a loooong, hot summer in DC baby.
David,
ReplyDeleteDid you see the Post article about Austin Spriggs? The guy refused to sell his plot to real estate developers on Massachusetts Ave. I don't know whether he is a hero or a complete nutbag.
I read that article. If he is looking to make money (which he probably is not) he lost his max profit potential.
ReplyDeleteIf he has other motives it could make sense. There were some rumours he wants to open a pizza place. ( Maybe he has Italian roots jk). Hmm.
Sounds like Austin went for a Ledo Pizza franchise instead.
ReplyDeletehttp://dcbubble.blogspot.com/2006/05/ledo-pizza-in-works-in-gallery.html
More Ledo's is always good.
ReplyDeleteA Redskins fan
"More Ledo's is always good"
ReplyDeleteI hope that the increased cost of electricity gas and property taxes does not cause the price of pizza to be beyond the reach of the average citizen. A home bound apartment dweller should at least be able to ride the metro and enjoy a good pizza, if not we are toast.
David,
ReplyDeleteHave you seen this article?
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/02/AR2006050201606.html
How do you reconcile these 2 paragraphs?
"The percentage of cash-out refinancings in the first quarter was the highest since the third quarter of 1990, about the time the real estate boom of the late 1980s ended, according to Freddie Mac."
"However, the dollar amount of refinancing loans has fallen from when interest rates were lower. Homeowners pulled $59.6 billion in equity out of their homes in the first quarter, down from $70.9 billion in the last quarter of 2005, according to Freddie Mac."
The first says that cash-out refinancing is the highest since 1990 but the second says that less equity was pulled out 1Q06 vs 4Q05. Obviously then, pulling equity out and cash-out refinancing are two different things. What is the distinction?
I have a feeling I'm going to smack my forehead when someone points out the difference...
Thank you!
I am generally liberal about economics and distrust the free market uber alles crowd.
ReplyDeleteHaving said that, I do think part of this credit dependency is peoples' own fault.
Adults need to think seriously about issues like "where does my energy come from?" "Can I afford to buy this or that?" "What will the long-term effects of signing a 30 year contract that eats up 50% of my take home pay be?"
Thinking seriously doesn't mean just assuming that everything will always be rosy in the future, and leaving no margin for error if you are wrong.
If you bought a 4,000 square foot house (high electricity bills) 50 miles from your job, and a Hummer to get you around, and financed all of that with no room to spare, you may be in a lot of trouble. Whose fault is that?
A Redskins fan
What's the problem? Can't I just do a cash out refi each month to pay for my lectricity?
ReplyDeleteOh...I'm in the yellow area and man, I'm not looking forward to it...the whole thing is just a big CF. Constellation should get a fair price for their product, but when did corporations completetly and totally stop giving a sh*t about the people who keep them in business? Sure, we can take a 72% bump, but did they ever think of phasing it in gradually out of goodwill? They already have the PSC in their pocket thanks to our Gov, but Constellation is acting just like Iran--demanding they get what they want (keep current corrupt PSC members, full interest and full rate increase and no deal on stranded costs, not reveal anything about compensation, I could go on...) or else they'll just walk away and slam us full on. If this merger with FPL goes through without the scrutiny of a magnifying glass and the promise of consumer savings, I'll go apoplectic.
ReplyDeleteOn the other hand, I can't wait to see all those who are already struggling to pay PITI after their ARM resets adn they can't refii b/c they already took out all their equity have to pay to cool those McMansions w/ 15 ft ceilings...
ANd I forgot to mention the PR when elderly people die of heat stroke or another heat-related issue this summer because they couldn't afford to run the AC. It happens every year even with cheap electricity--imagine what could happen...it's truly sad.
ReplyDeleteall those "UP"s and one big down: the US dollar.
ReplyDeleteon the electricity thing: you gotta find the rare rental where all utilities are included :)
mytwocents,
ReplyDeleteOne comment is referring to a percentage while the other comment is referring to a dollar amount. In other words, while they have the highest percentage of people refinancing their mortgages into an amount at least 5% higher than the original balance, the total dollar amount is smaller. This might be implying that people with less expensive houses and smaller mortgages are doing the refinancing now, whereas it was people with larger mortgages in the fourth quarter of 2005.
I sympathize with Nikki. I also live in the yellow area (southern Howard County) and the governor and the legislature are all patting themselves on the back that they can do a phase-in of the 72%. It's like asking someone if they want a rectal exam all at once or broken up into a few smaller exams.
ReplyDeleteThe reason why the increase is so high is because the state had this grandiose vision of real competition in electric utilities. It never materialized and this is the result.
You sympathize with her desire for human suffering? Let the supposed "rich homeowner's" sweat it out this summer. Even better - no grocery money! Woo Hooh!!!!
ReplyDeleteBTW Nikki,
ReplyDeleteDo you have elderly parents or grandparents? Even if they own their home, they may not be able to afford air conditioning if on a fixed income. Laugh riot!
There seems to be a pervasive lack of empathy among some on this site.
A desire; almost desperate overwhelming desire to see people take a fall. By "people" I mean anyone more sucessful - in particular, anyone who owns a home.
So owning a home equals successful? I thought it was just a decision.
ReplyDeleteAnonymous,
ReplyDeleteThanks for the explanation attempt but I think I have it now. I took "cash out" refinancings to mean all equity taken out rather than "cash out" to be a subset of the various types of refinancing loans available. So I now see how the former could be higher (as a %) even though the latter is dropping.
If "cash out" were the same as "equity removed" as I read it, then there's no way 1Q06 was higher than 4Q05. Simply put, I misinterpreted "cash out refinancing."
Thank you!
Isn't the reason for the massive increase in electricity price that the legislature froze (or severely limited the growth of) electricity rates for several years. This was done in exchange for supposedly implementing some sort of deregulation of the utilities in the state. And so the utilities entered into future contracts, etc. to keep a steady cost of energy for a certain period of time. And now that they are not hedged on the energy cost side as well, the utility ocmpanies have to raise the prices charged to cover the much higher cost of energy (gas, etc.)?
ReplyDeleteKevinR,
ReplyDeleteWhy then is Nikki not lamenting the toll on renters? You can't have it both ways if you are going to make any valid point.
I'm an apartment renter in the green area, and my rent will be almost the same as last year in a building that pays all utilities. (I think this is true more of the older buildings with no meters on individual apartments).
ReplyDeleteMy building is also offering large incentives to new residents. So with rising energy costs not being passed on to me, I am betting that I am seeing a de facto rent decrease.
Build a house correctly and you won't have this problem. My house is built into the side of a hill so the lower half needs little AC. 4800 sq. ft. insulated correctly (by me). $83 electric bill last month with sprinklers running full blast because it has been over 80 degrees for the last 2 months. Water bill? ZERO because I built on 2.5 acres and can have a well. FREE water!!!
ReplyDeleteBuy a cheap ass shack from one of these builders and get reamed monthly with high electric bills.