Federal regulators on Thursday approved a system to auction electricity contracts that could add between $8 and $12 a year to the bills of residential customers who use an average 700 kilowatt hours per month. Commercial customers can expect a similar percentage increase, officials said.

“The bottom line for businesses is that their energy costs will be higher,” said Robert E. Earley, an energy lobbyist with the Connecticut Business & Industry Association. “Businesses need to understand that higher energy costs are going to be a part of doing business.”

The annual auctions begin in early 2008, and the positive feature of the system, Earley and other analysts say, is there is now a commitment to build more power plants and increase generating capacity, the lack of which has been crippling the state.

Auctioning contracts to power generators to supply electricity three years after the auction is held will be an incentive for them to build power plants in the region, supporters of the proposal say.

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Posted: 06|17|06 at 2:54 pm. Filed under: US Auction News.