Why Your Utility Bill Is Still Rising Even When Power Is So Cheap
Comment of the Day

April 04 2016

Commentary by David Fuller

Why Your Utility Bill Is Still Rising Even When Power Is So Cheap

Here is the opening of this topical article from Bloomberg:

Record-low costs for power in the U.S. haven’t translated into lower monthly payments for consumers.

As the price of electricity in the eastern U.S. fell by half over the last decade, utilities raised monthly bills for residential customers by 26 percent, according to government data. Consumer advocates say the power companies are using falling electricity costs as cover to raise other charges. Utilities counter that it’s payback for billions of dollars worth of government-mandated improvements to long-neglected infrastructure.

It’s “a good thing that energy prices have fallen off and allowed the required capital to be installed and be done without impacting the consumer,” said Exelon Corp. Chief Executive Officer Chris Crane in an interview during a conference organized by Bloomberg New Energy Finance in New York on Monday.

Electricity itself makes up about a third of the average utility bill, down from about half just eight years ago, thanks to a flood of cheap fuel, natural gas extracted with fracking from tight-rock formations. The rest of the retail charges are for delivering supplies, including adding enough capacity to handle demand surges.

David Fuller's view

The too often postponed infrastructure repairs are clearly necessary and obviously not just in the USA.  Imagine how much worse this situation would have been if technological innovation had not led to lower prices for crude oil and natural gas

In another example, Japan still faces higher energy costs because it understandably closed all its nuclear reactors following the Fukushima meltdown.  They previously provided almost 30 percent of Japan’s electricity.  Japan is increasing its solar and wind power but this currently produces less than 15 percent of its electricity.  Consequently, Japan has had to import more coal, oil and natural gas.  This situation is only just beginning to improve as Japan is gradually reopening some of its nuclear reactors, in what are regarded as geologically safer regions, following additional safety measures.  

Most countries should benefit from lower energy costs in years ahead as renewables become more efficient, oil and gas prices stay low and new nuclear is used more widely. 




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