Burns & McDonnell - Watch our T&D How videos
Pierce Atwood welcomes Valarie Green as new energy law partner

Average Real Electric Rates Falling

In the week of April 9, 2018, the latest Consumer Price Index was published. Overall consumer prices increased 2.4 percent in the year ending March. Average electric rates increased a little less during the same period, by 2.2 percent.

Overall consumer prices increased 4.8 percent in the two years ending March. Average electric rates increased significantly less during the same period, by 3.8 percent.

Overall consumer prices increased 5.7 percent in the three years ending March. Electric rates increased far less during the same period, by 2.1 percent. 

The reason average electric rates increased less in the last three years than in the last two years? Because rates actually fell from March 2015 to March 2016.

So, whether you’re looking at the last year, the last two years, or the last three years, average electric rates have been losing ground to the CPI. This means rates, adjusted for inflation, are falling. 

The latest data on electric bills as a percent of consumer expenditures shows this percent is at an all-time low. After my column on this topic, some of you wrote in to ask, what’s driving this percent so low?

One of the main drivers is higher energy efficiency. Consumers are running more and more electric machines, appliances and devices, but as these have become more efficient, kilowatt-hour usage has moderated. This pushes down electric bills.

But one of the main drivers is lower per-kilowatt-hour rates — inflation-adjusted — as the latest CPI data demonstrates. This also pushes down electric bills.

If kilowatt-hour usage is moderating, while real per-kilowatt-hour rates are falling, then electric bills are falling too. And consumers are smiling. Or would be smiling if they realized they’re getting a better deal these days.

 

For ninety years, since 1928, Public Utilities Fortnightly has served as the platform for thought leaders to impact the debate in utility regulation and policy. Join the debate. Have your organization join the debate, as a member of the PUF community.  

Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly

E-mail me: mitnick@fortnightly.com