Wholesale electricity prices were lower and less volatile last year
Wholesale electricity prices were lower and less volatile last year
Wholesale electricity prices were lower last year on average than they were in 2023, according to a new analysis from the Energy Information Administration. They were also less volatile than they had been over the past few years.
When you get your electric bill every month do you just check how much you owe and pay it? Or do you really look at it?
Mark Morey at the Energy Information Administration said if you do really look, you should see an itemized list.
“There’s a connection charge, there’s a distribution charge there, and then there’s a charge for the amount of electricity you are actually using in your home,” said Morey.
That last charge is the part of your bill that’s affected by wholesale electricity prices.
And, Morey said, if those prices drop, “ideally that cost for the actual energy you’re using should be lower.”
But Catie Hausman at the University of Michigan said that doesn’t necessarily mean your actual bill will be lower.
“We also all pay a fair amount for things like new transmission or new distribution infrastructure,” said Hausman. “And costs in a lot of the country are not falling for those other components of our bills.”
Wholesale electricity prices fell last year on average for a couple of reasons. Natural gas prices were low. A lot more solar and wind power got connected to the grid, and they produce energy at a very low cost.
But Amy Myers Jaffe at New York University said other costs utilities pay have been rising in many places.
“So if you’re in California and they had to bury transmission lines and distribution lines because of fires, that’s very expensive,” said Jaffe. And a lot of that expense is getting passed on to you.
Another expense utilities often pass on? The cost of building all those new wind and solar projects.
But Christopher Knittel at Massachusetts Institute of Technology’s Sloan School of Management said that, at least, is getting cheaper.
“When President Carter passed away, one of the things that President Carter was known for was putting solar panels on the White House,” said Knittel. “So I went back and looked at the data on the cost of building solar in 1979 relative to today, and the costs have fallen by 99%.”
The costs of building wind and battery storage have come way down, too. And, he said, as all those costs continue to fall, hopefully — eventually — our electric bills will, too.
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