Why Electricity Bills are Skyrocketing

Making an electric bill payment isn't the most exciting way to spend your money. Electricity costs are rising, and consumers wonder why this trend is taking place (and for how long).

Electricity is such a huge part of life, you rarely think about its existence. That is, of course, until the power goes out. Rummaging through drawers, you look for candles and matches and hope that the outage is only temporary.

But a lot goes on behind the scenes in the electricity industry. Efficiency is improved with new technologies. Ever-increasing demands of consumers require strategies that take time and investment. Advancements in technology are needed to lower emissions and keep the air and water clean.

In spite of all these changes, power prices are still quite reasonable. Regulations have protected consumers from struggling with electric bill burdens that are too much to bear.

Rate freezes and reductions created to keep energy costs low are expiring in states around the nation. Consumers will see the evidence of rising fuel prices and operating costs as they open their monthly power bills. The electric utility industry believes that although introducing new electricity rates is a challenge, it's necessary if the industry is to remain reliable, affordable, and safe for the environment.

America's thirst for electricity is impossible to quench. Think of how the average consumer's demands have increased over the past 30 years: personal computers, big-screen TVs, and mobile devices need power. Greater electricity needs lead to greater demands on providers.

A boost in electricity costs may seem drastic, but according to the electric utility industry, prices haven't kept up with the rate of inflation over the years. In spite of a growing need for electricity, prices increased by only 1.1 percent each year from 1985 to 2000. At the same time, inflation shot up at a rate of 2.4 percent.

Even though power prices have escalated at the rate of 2.5 percent every year since 2000, we've seen greater spikes in prices of other consumer goods, like health care, gasoline, and food.

Electricity is generated from a number of different sources, including oil, natural gas, nuclear energy, and coal. The ratios differ depending on what part of the country you live in. Location determines the fuel sources' availability and price. The industry claims that maintaining a variety of fuel sources is crucial in order to keep electricity affordable. Dependence upon only one source of fuel would increase costs, although with fuel variety comes the need to update infrastructure which also increases costs.

Today's appliances use less energy than they did decades ago. But other devices that need to be charged and plugged in are introduced along with energy-saving technology. This boosts the demand for electricity, causing a chain reaction of events that lead to higher electricity bills.

The power industry is costly to maintain. Power plants, lines, and equipment all need to be updated and maintained regularly. The cost to provide electric varies depending on where you live. Fuel costs and availability, usage patterns, and environmental conditions factor into expenses, so certain parts of the country receive higher electric bills than others.

The US Department of Energy claims that consumer demand for electricity will grow at about 1.5 percent each year, leading up to a 45 percent total increase by 2030. New technology needed to meet this demand is estimated to cost over $300 billion.

Higher electric utility bills are unavoidable. The average home continues to grow in energy demands, and power companies need to take costly steps to meet this demand. Advancements in technology to improve efficiency, reliability, and emissions in power plants also cost money, and consumers will continue to feel the weight of this burden as they pay their electric bills.

Bio

Laura Ginn likes to keep a close eye on the cost of her gas and electricity as prices always seem to be going up. I make sure I get the cheapest gas and electricity in my area by using uSwitch.com to compare the prices offered by all of the major and local suppliers.