Electricity prices keep increasing. According to a U.S. Energy Information Administration report, the average monthly bill for U.S. residential customers increased 13 percent from 2021 to 2022. The increase was the largest annual increase since 1984. During the first quarter of 2023, the average residential bills were five percent higher than at the same time last year.
There are several examples of utility rate hikes in different regions of the nation:
- California Public Utilities Commission approved a 12.8 percent rate hike in November 2023 for Pacific Gas & Electric (PG&E). The utility company requested a rate hike of 17.9 percent and will invest two-thirds of it in wildfire risk management plans. PG&E is the largest utility company in the U.S.
- The Oregon Public Utility Commission approved a rate increase of 17.2 percent for Portland General Electric, marking the second year in a row of rate increases.
- The Wisconsin Public Service Commission approved rate hikes for Madison Gas & Electric, Xcel Energy, Alliant Energy, We Energies, and Wisconsin Public Service.
One of the reasons that electricity is increasing is that net metering credits customers for the energy they generate with solar panels and sends it to the grid. Higher fuel costs for power plants are another reason. The cost of fossil fuels delivered to U.S. power plants increased from $3.82 per million British thermal units (MMBtu) in 2021 to $5.13/MMBtu in 2022.
Some states are looking at strategies to decrease electricity prices. New York and New Hampshire have tiered discounts for low-income residents. Hawaii regulators adopted a system with a time-of-use design so customers can look at rate options to save money. Regulators in California are considering implementing a fixed charge on electric bills based on income. No other state has that type of system in place.
The ultimate solution is renewable energy, which can keep electricity prices “generally stable,” according to the World Resources Institute. Solar and wind farms only need the sun or the wind to keep going. Fossil fuel energy needs a constant fuel supply that needs to be delivered.
While fossil fuel prices increased and decreased, solar costs have dropped 85 percent since 2010, and onshore and offshore wind costs have fallen by about 50 percent. Electricity bills will be lower in 2030 and 2050 if the world invests in enough renewable energy to reach net-zero emissions, the International Energy Agency predicted. Building a solar or wind project is cheaper than operating most of the nation’s coal-fired power plants.
Government investment in renewable energy will reduce electricity bills. A report from the Rhodium Group found that investments in renewables, electrification, and energy efficiency will save the average household $500 annually in reduced electricity costs. Implementing renewable energy tax credits for the power sector would save American electricity customers over $5 billion a year within two years of implementation.
Increased investment will also lower the greenhouse gas emissions of the U.S., the world’s second-biggest emitter. The time is now to reduce emissions while reducing electricity rates.