According to EIA, the first half of 2014 showed the highest year-over-year growth in residential electricity prices since 2009, with the largest price increases recorded in New England.
On September 2, 2014, the Energy Information Administration (EIA) released a report highlighting that U.S. retail residential electricity prices from January-June 2014 showed the highest year-over-year growth since 2009, increasing by approximately 3.2 percent from the same period in 2013. Retail electricity prices averaged approximately $0.123 per kW-hour and rose throughout the U.S. except the Pacific Census Division (excluding Alaska and Hawaii), where prices declined by 2.5 percent. Notably, New England recorded the largest price increases averaging 11.8 percent.
The EIA explained that in addition to taxes, fees, and other charges, electricity bills have two main components – generation or energy (electricity generation costs) and delivery (transmission and distribution costs). All New England states, except Vermont, have restructured the industry, enabling residential customers to choose an alternative retail supplier for the energy component of their electricity bill. More than 25 percent of New England’s residential customers pay a retail supplier other than the regulated utility for electricity generation. Full-service utilities and restructured retail suppliers recorded year-over-year rate increases of 11.9 percent and 11.6 percent, respectively, during January-June 2014.
According to EIA, New England retail electricity price increases are largely due to a sharp rise in wholesale power prices. From January-June 2014, the ISO-New England area’s day-ahead wholesale power price averaged $93 per MW-hour, 45 percent higher compared to the same period in 2013. Restructured retail suppliers’ rates showed a 21 percent increase in the energy component indicating increased electricity production costs, compared to a mere two percent increase in the delivery component attributable to additional spending on transmission infrastructure.
EIA attributed the 2.5 percent decline in Pacific residential prices to a credit saving of approximately $35 on electric bills for most investor-owned-utilities’ customers in April. The credit is attributed to the California Climate Credit from cap-and-trade carbon allowance sales. Excluding April, the Pacific region’s residential electricity prices increased by 0.9 percent from January-June 2014 compared to the same period in 2013.
Originally published by EnerKnol.
Founded in 2011, EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.
