When the talk turns to energy costs, most people end up discussing the pain at the pumps. Gasoline prices, while not as high in the midwest, are making Connecticut motorists wince nonetheless, as they approach the dreaded $2-a-gallon mark.  But this hasn’t been the only bad news on the energy front.

Connecticut’s electric rates are among the highest in the country. There are many factors that have brought this about – the state’s reliance on expensive nuclear power, the need to import fuel for conventional power plants, high taxes, costly mandated pollution controls, and a lower per capita rate of electricity consumption than in other regions of the country. Starting July 1, however, the electric power industry in Connecticut will be deregulated, and the architects of deregulation hope that energy savings will soon start flowing into the state through the light switch if not at the gas pump.

Deregulation, as we have seen in the cable industry, does not always drive down costs. But with our electric rates soaring, something had to be done. In 1997, when legislators were researching the deregulation of the power industry, the national average retail cost of electricity per kilowatt-hour was 7.16 cents. Connecticut Light & Power was charging 10.18 cents per kwh at the time. United Illuminating was even higher than that, at 11.79 cents per kwh. So something had to be done. Whether or not this new system will generate the competition needed to drive prices down remains to be seen. Few companies are poised to offer electricity in Connecticut; one of those is a wholly owned subsidiary of Northeast Utilities, selling only to businesses and municipalities. But in Pennsylvania, where the power industry was deregulated a year and a half ago, dozens of companies are now selling electricity in much the same way that long distance phone service is sold.

It is hard to quantify just how much of a drag high electricity rates have been on our state’s economy, but we may soon get to see. The law mandating deregulation is also requiring a 10 percent drop from 1996 rates between now and the end of 2003. This “standard offer” rate will be the rate against which all others compete. As the competition heats up, we hope the state’s Department of Consumer Protection remains vigilant against the inevitable abuses, including slamming (changing a customer’s electricity supplier without permission). But we are also hopeful that once the people of Connecticut are relieved of the burden of high electricity costs, they will have a little extra money in their pockets for other things – like a fill-up at the gas station.