You are currently viewing Electricity prices surged 14.3% in 2022, double overall inflation: US report
Large view on the windmill and powerlines on the field in winter season

Electricity prices surged 14.3% in 2022, double overall inflation: US report

Dive Brief:

  • Consumers paid an average of 14.3% more for electricity in 2022 compared to 2021, according to Consumer Price Index data that the U.S. Bureau of Labor Statistics released on Jan. 12.” This increase is more than double the overall 6.5% rise in consumer prices. On a month-to-month basis, electricity prices rose by 1%, while the overall CPI decreased by 0.1%.
  • According to the Energy Information Administration, electricity prices are expected to continue rising, albeit at a slower pace. The average residential electricity rate increased from 13.66 cents per kWh in 2021 to 15.07 cents in 2022. Projections indicate rates will climb to 15.45 cents per kWh in 2023 and rise by another penny in 2024.
  • Heating homes with electricity will cost 10.2% more this winter than it did last year. Households are projected to spend an average of $1,359 for the season, according to the National Energy Assistance Directors’ Association (NEADA).

Dive Insight:

  • The inflationary pressure gripping the U.S. economy since late 2020 has started to ease. For example, price increases in December slowed to 6.5% year-over-year, down from 7.1% in November. This marks the sixth consecutive month of year-over-year declines, following a peak of 9.1% in June 2022.
  • However, electricity inflation peaked at 15.8% in August, according to the BLS data.
  • Tyson Slocum, Director of Public Citizen’s Energy Program, emphasized that domestic electricity prices are heavily influenced by global events, especially the war in Ukraine. Russia’s invasion disrupted global energy markets, contributing to rising prices in the U.S.
  • Slocum also noted that energy costs are regressive—they consume a larger portion of income for low-income households than for wealthier ones. Although improving energy efficiency could help, renters often lack the authority to make such upgrades.
  • The Inflation Reduction Act provides new funding for energy efficiency improvements, but Slocum pointed out that it remains “heavily tax incentive-focused,” which limits accessibility for many Americans.
  • As of Nov. 7, more than 20 million U.S. households were behind on utility bills, according to NEADA. Families collectively owed $16.1 billion as of August 2022, nearly double the total owed in December 2019. The average amount owed per household rose from $629 to $788.
  • The EIA projects a decline in retail electricity sales in 2023, citing a milder summer with about 10% fewer cooling degree days. Electricity generation is also expected to fall this year, before trending upward again in 2024.
  • Significantly, renewable energy sources are leading the growth in U.S. electricity generation. Renewables are projected to account for 24% of U.S. electricity generation in 2023, and 26% in 2024, up from 21% in 2022.
  • In addition to electricity, natural gas use and prices hit historic highs. The EIA stated that natural gas consumption, production, and exports all set new records in 2022. Increased demand in the electric power sector played a key role, with real average prices reaching their highest point in 14 years.

Original article by: https://www.utilitydive.com/news/electricity-prices-inflation-consumer-price-index/640656/