NCPA - National Center for Policy Analysis

Household Electricity Bills Skyrocket

December 14, 2011

Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity, says USA Today.

  • Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate.
  • The jump has added about $300 a year to what households pay for electricity.
  • That's the largest sustained increase since a run-up in electricity prices during the 1970s.
  • Electricity is consuming a greater share of Americans' after-tax income than at any time since 1996 -- about $1.50 of every $100 in income.

Greater electricity use at home and higher prices per kilowatt hour are both driving the higher costs, in roughly equal measure:

  • Residential demand for power dropped briefly in 2009 but rebounded strongly last year to a record high.
  • Air conditioners and household appliances use less power than ever.
  • But consumers have bigger houses, more air conditioning and more electronics than before, outpacing gains in efficiency and conservation.

Prices are climbing, too, hitting a record 11.8 cents per residential kilowatt hour so far this year, reports the Energy Information Administration.  The increase reflects higher fuel prices and the expense of replacing old power plants, including heavily polluting -- but cheap to operate -- coal plants that don't meet federal clean air requirements.

Electricity cost varies widely depending on where you live.  Cheapest: Northwest communities near hydropower dams -- as low as 2 cents per kilowatt hour.  Most expensive major utility: Consolidated Edison, supplier of New York City -- 26 cents per kilowatt hour.

A potential bright spot: Electric bills appear roughly the same so far this year as last when adjusted for inflation, based on preliminary reports.  However, the future of energy prices and the upcoming closure of more polluting coal plants make the long-term outlook cloudy for consumers.

Source: Dennis Cauchon, "Household Electricity Bills Skyrocket," USA Today, December 13, 2011.

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