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With consumers in many parts of the country facing sharp increases in their electricity bills, officials in some states are considering rate caps or other measures that would beat back deregulation.

The expected increases stem from the deregulation of retail electricity markets and the recently soaring costs of the natural gas used to generate electrical power. In the 1990s, nearly half of the states deregulated electricity in hopes of fostering competition and ultimately lowering prices for consumers. To give competition time to take hold and guard against market disruptions, many states lowered, and then froze, electricity rates for a few years or found other ways to temporarily stabilize prices.

Rate freezes already have expired in several states, including New Jersey, New York and Ohio, and the last vestiges of rate regulation are set to expire this year in a half-dozen large states, including Illinois, Michigan and Texas. The big rate increases on the horizon in some states have undermined support for deregulation among both consumers and policy makers.

In Delaware, for example, customers of Pepco Holdings Inc.'s Delmarva Power unit face a 59% to 117% rate increase in May that would push the average residential bill to $145 a month from $91 for 1,000 kilowatt hours of electricity; industrial users face the biggest increase. Northeast Utilities' Connecticut Light & Power Co. customers face a 22% increase in rates, which would add $23.36 a month to the average household's bill. In Texas, rates have risen more than 80% for customers of the state's biggest utility, TXU Corp.

"High prices almost guarantee a political reaction," says Kenneth Rose, senior fellow at the Institute of Public Utilities at Michigan State University.

Until deregulation, utilities generally owned the power plants that furnished electricity to their customers. They sold power at regulated prices based on their costs. As states started to deregulate, many utilities sold their power plants to unregulated affiliates or others. For a time, they continued to buy power under contract from their former plants. Many of those deals are coming to an end, leaving utilities to negotiate new supply contracts at a time when high natural-gas prices have driven up wholesale electricity prices.

That has provided a special boost for owners of nuclear and coal-burning power plants, who benefit from sharply higher electricity prices but whose fuel costs typically are low compared with natural-gas-fired plants. "Customers I talk to find it amazing and disturbing that this is happening," says Dave Kolata, head of the Citizens Utility Board, a Chicago consumer group.

Edison International, Exelon Corp. and Constellation Energy Group Inc., which own many non-gas-fired plants, may be among the biggest beneficiaries, but many smaller players also could profit from being able to sell to utilities that had been under contract to another provider.

Some state officials are stepping forward to propose rate caps and other measures meant to hold down increases in electricity bills. But the proposed fixes could put utilities in a cost squeeze. Similar proposals backfired five years ago during California's electricity crisis, bankrupting the state's biggest utility. Critics also say the measures do nothing to fix the underlying problem of surging wholesale power costs.

In Maryland, a growing group of lawmakers wants to limit rate increases to 5% a year amid evidence that prices at Baltimore Gas & Electric Co. otherwise could surge 40% to 80% in July when a six-year rate freeze ends.

With the entire General Assembly and governor up for election, "you don't have to be brilliant to see what's coming" if lawmakers fail to act, says Delegate Patrick McDonough, a Republican from Baltimore and sponsor of the bill that would limit rate increases. Ahead of deregulation, BG&E transferred its power plants to an unregulated unit of parent Constellation Energy. That unit had a 46% increase in fourth-quarter profit.

Paul Allen, a spokesman for Constellation Energy, says his firm hopes Mr. McDonough's bill "is a political gesture, not a piece of serious economic legislation" because it wouldn't give BG&E enough money to buy electricity for its customers. That could lead to a situation similar to that faced by Pacific Gas & Electric Co. in 2001, when runaway prices in California's wholesale electricity market pushed the San Francisco company into bankruptcy court because it wasn't permitted to raise retail rates enough to cover its higher power costs. Eventually, those costs were imposed on consumers.

Connecticut Attorney General Richard Blumenthal last week asked the Legislature to impose a windfall-profits tax on nuclear generators whom he says are reaping "excessive" profits. The state's utility regulators also have been working to delay some rate increases until the winter heating season ends.

Mr. Blumenthal says he believes nuclear plants are reaping returns of 44% to 100%, compared with the 10% or so they were permitted when owned by regulated utilities. Mr. Blumenthal wants the Legislature to impose a 25% to 50% tax on profit margins in excess of 20% and use proceeds to offset electricity costs.

Dominion Resources Inc., Richmond, Va., which owns two nuclear units in Connecticut, says profit levels at the nuclear units are "proprietary" and it opposes a windfall-profits tax. Some nuclear plants that were poorly run by utilities have become stellar performers under new owners, such as Dominion and Exelon, which can command market prices.

Mr. Blumenthal also wants Connecticut to create a state power authority that would sell energy at the cost of production. California attempted a similar tactic during its energy crisis but later dismantled the fledgling agency when it concluded it was impractical for the cash-strapped state to produce and sell power.

In Illinois, legislators were expected to introduce this week a bill to extend a decade-old retail rate freeze for three years. That is similar to what Ohio did last year when it postponed its own day of reckoning to 2008, hoping for lower prices by then. But a rate freeze in Illinois would do nothing to prevent power procurement costs from rising sharply for utilities owned by Exelon and Ameren Corp., which will begin buying power for millions of customers through energy auctions this year to replace expired supply contracts.

John Rowe, Exelon's chairman, says his firm would be willing to defer some power costs for collection in future years to reduce the immediate impact to customers of Commonwealth Edison, Exelon's Illinois utility unit. He adds that such measures amount to Band-Aids and "making a market system that works here is still a problem" that must be worked out.

The beginnings of a backlash may even be brewing in Texas, a staunch supporter of deregulation. The chairman of the Texas Public Utility Commission says he wants to haul utilities before his body to explain what they intend to do once the last vestiges of rate regulation end this year. He hasn't been able to win support from other members of the commission.

Michigan, meanwhile, has been among the bright spots for consumers. The state's utilities didn't divest their power plants, most of which are coal-fired or nuclear and thus have relatively low operating costs. Although a rate freeze ended there for small consumers in January, rates are up just 6% to 7%.

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