April's Electric and Gas Rates

April’s Consumer Price Index was reported on May 15. The overall CPI, for all goods and services, was up 3.4 percent as compared with a year earlier – April 2023.

This follows the recent trend of inflation that is moderate. Though not as low as desired.

Better news about average weekly earnings. They’re now 3.9 percent greater than a year earlier.

The average price or rate per therm for utility natural gas service was down 1.9 percent as compared with a year earlier.

The average price or rate per kilowatt-hour for utility electric service was up 5.1 percent. Which was more than the overall CPI increase of 3.4 percent noted above.

This trend in electric rates still reflects what happened in the late fall and winter. There were significant changes upwards in November, January, and March.

April’s numbers however were a good sign perhaps. Electric rates on average fell last month, albeit slightly.

Utility services are a relatively small factor in the inflation index. Electric service prices are only one-forty-first of the overall CPI. Gas service prices are only one-hundred and forty-fifth of the overall CPI.

Utility customers naturally perceive the cumulative effects of inflation. Even moderate inflation.

Suppose electric rates increase 3.0 percent per annum. Then they’ll be 15.9 percent higher after five years. And 34.4 percent higher after ten years.

Let’s express this effect in cents per kilowatt-hours. A rate of 15 cents per kilowatt-hour at the beginning of the ten years? It will become 20.2 cents per kilowatt-hour at the end of the ten years.