Electricity Costs Increasing

Seems like no matter what we do, we still have incredibly high electrical costs here. I’m sure others feel the same! We are charged just short of $30 a month to simply have the potential to turn on a light. I can’t wait until the price for KWH gets even higher….(sarcasm, of course!)

(CNSNews.com) – The average price for a kilowatthour (KWH) of electricity hit a March record of 13.5 cents, according data released yesterday by the Bureau of Labor Statistics. That was up about 5.5 percent from 12.8 cents per KWH in March 2013.

The relative price of electricity in the United States tends to rise in spring, peak in summer, and decline in fall. Last year, after the price of a KWH averaged 12.8 cents in March, it rose to an all-time high of 13.7 cents in June, July, August and September.

If the prevailing trend holds, the average price of a KWH would hit a new record this summer.

Electricity Price in March

The BLS’s seasonally adjusted electricity price index rose to 209.341 this March, the highest it has ever been, up 10.537 points—or 5.3 percent–from 198.804 in March 2013.

In its press release on the Consumer Price Index, BLS noted that the overall energy index declined in March, driven by declining gasoline and fuel oil indexes, despite increases in natural gas and electricity.

”The energy index fell 0.1 percent in March after a 0.5 percent decline in February,” said BLS. “The gasoline index declined 1.7 percent in March, the same decline as in February. (Before seasonal adjustment, gasoline prices rose 5.1 percent in March).

“The fuel oil index also declined, falling 2.9 percent after rising 4.1 percent the previous month,” said BLS. “In contrast, the index for natural gas rose sharply, increasing 7.5 percent, its largest one-month increase since October 2005. It has increased 15.3 percent over the last three months.

“The electricity index also increased, rising 1.1 percent,” said BLS. ”Over the last 12 months, the energy index has increased 0.4 percent, with the natural gas index rising 16.4 percent, the electricity index increasing 5.3 percent, and the fuel oil index advancing 2.1 percent. These increases more than offset a 4.7 percent decline in the gasoline index.”

Electricity Price Index

Historically, rising electricity prices have not been inevitable in the United States. The BLS’s annual electricity price index—which goes back a century—shows that electricity prices generally declined in the United States between 1913 and the end of World War II.  They then held relatively steady for about two decades before beginning to escalate in the late 1960s.

As CNSNews.com reported in February, per capita electricity production peaked in the United States in 2007.

The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.

1 Comment (+add yours?)

  1. Isaiah
    Apr 17, 2014 @ 19:09:33


    Amid the growing economic and energy crises, electricity could become a pricey luxury instead of an affordable staple.

    Electricity powers us through every day, from when our alarm clock wakes us up in the morning to when we turn off lights at night. While it’s easy to take electric power for granted, that may not always be the case. Today’s economic crisis makes it all the more critical that work begin soon to address growing issues in the energy industry. Otherwise, electricity could quickly become less of an affordable staple and more of a pricey luxury.

    Cleaner coal plants, such as the one proposed for Rogers City by Wolverine Power Cooprative, can help future energy needs and protect the environment.In recent years, the collision of several factors–increasing demand for electricity, rising fuel and construction costs, and climate change–has created what’s been called the energy industry’s “perfect storm.” The U.S. Energy Information Administration (EIA) forecasts that the need for electricity will climb by 30 percent between now and 2030.

    To meet this growth, the U.S. Department of Agriculture projects that electric co-ops must double generation capacity over the next 11 years. Yet building new power plants will be expensive, so electric co-ops must turn to both cutting-edge and time-tested solutions to “keeping the lights on”—from advanced power generation technology still under development to proven energy efficiency programs.

    “Without advancing technology, our options are limited,” says Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA), the Arlington, VA-based service arm of the nation’s 900-plus consumer-owned electric co-ops. “But whatever solutions we come to in addressing this energy crisis must keep consumers in mind. With many electric co-op members already working hard to make ends meet, this is no time to enact hasty energy policy that will push electric bills higher.”

    Relatively high costs for construction materials and uncertainty about climate change goals, which could place strict limits on carbon dioxide emitted by power plants, have stalled development of new base-load generation, the large, efficient stations that provide dependable and affordable electric power year-round.

    New nuclear power plants—sources of clean base-load generation—are stymied by high costs and local political resistance in many areas. As a result, the last new reactor to become operational was a Tennessee Valley Authority (TVA) plant in 1996, according to the Nuclear Energy Institute. Since then, only one other, older reactor was refurbished, also by TVA in 2007.

    Unless new, thoughtful public policy streamlines the process, that trend could continue, English warns.

    In years past, the burden of meeting electric demand would typically fall to coal-fired plants, which provide about one-half of the nation’s electricity. But with plans for new coal plants hitting snags, utilities are being forced to turn to a more expensive fuel: natural gas. In 2007, generation and transmission co-ops planned on using natural gas for one-quarter of their new power plants; in just one year that number has climbed to 53 percent.

    “The main challenge we’re facing now is that it’s hard to build new base-load generation in general, but even tougher for units that don’t burn natural gas,” remarks Paul McCurley, NRECA chief engineer. “The lower up-front costs but higher operating costs of natural gas generation traditionally made it a good fuel source for peaking power—used when demand for electricity is at its highest—but not for base-load power plants that generate electricity around the clock.”

    “There’s no doubt it is going to be difficult to build new coal-fired and nuclear power plants in coming years, two key sources of base-load generation,” English says. “The resulting reliance on natural gas increases the risk of higher electric bills to consumers and lowers overall reliability due to decreasing fuel diversity. Unfortunately, the question no longer is whether electric bills will increase, but just how high they will go.”

    In an effort to broaden limited options and make bills more affordable, electric co-ops have come to embrace the concept of a multi-pronged solution spelled out by the Electric Power Research Institute (EPRI), a nonprofit, utility-sponsored consortium whose members include electric co-ops. With heavy focus on research and development, an array of yet-to-be-developed and existing technologies could keep affordable electricity flowing between now and 2030 while significantly reducing carbon dioxide emissions.
    Steps to achieving that diverse solution include investing in renewable energy, building advanced, clean-coal-fired power plants, expanding nuclear power capacity, stringing new transmission lines, and improving energy efficiency across the board.

    Fortunately, electric co-ops have a long tradition of promoting energy efficiency. “The vast majority of electric co-ops, a full 92 percent, already sponsor energy efficiency education programs, and 77 percent offer residential energy audits to their consumers,” explains Ed Torrero, executive director of NRECA’s Cooperative Research Network. “Just under half provide financial incentives for residential energy efficiency upgrades.”

    Electric co-ops are also pioneers in load management programs, which allow them to reduce power consumption by managing when and how electricity gets used. Consumers, who volunteer for the programs, typically don’t even notice when “load control” happens.

    Between energy efficiency and load management efforts, electric co-ops reduced demand by 2,200 megawatts in 2006—roughly the equivalent of three large coal-fired power plants, according to EIA. That added up to $50 million in fuel cost savings and offset more than 2,000 tons of carbon dioxide emissions, equal to what 700 cars put out in a year.

    That kind of proactive planning has partially reduced pressure on the electric utility industry as a whole, but more work remains. As soon as next year, some parts of the country could experience a very real shortage of power unless more power plants are built, according to a late 2008 report by the North American Electric Reliability Corporation, a Princeton, NJ-based nonprofit organization charged with monitoring America’s power system reliability.

    As the “perfect storm’s” thunderheads continue to build, electric cooperatives are working hard to keep electricity safe, reliable, and affordable.

    English points to the electric co-op grassroots awareness campaign “Our Energy, Our Future,™” as an important part of solving the nation’s energy crisis, and encourages consumers to visit ourenergy.coop to continue the effort.

    “By creating a dialogue between consumers and elected officials about our collective energy future, we build the foundation for a working partnership in which government understands and can help meet the needs of cooperative members,” English explains. “Though co-ops are taking steps to deal with this impending crisis through energy efficiency and demand-response programs, serious policy decisions are ahead of us—the root problems are certainly not going away.”

    Scott Gates writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association.


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