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Report: Households See Electricity Prices Rising At Record Levels

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Michael Bastasch DCNF Managing Editor
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Electricity prices are on the rise across the country, according to federal government data. The average price has risen more than 3 percent since the same time last year — the highest year-over-year growth for the first half of the year since 2009.

According to the U.S. Energy Information Administration, residential electricity prices — what households pay to keep the lights on — averaged 12.3 cents per kilowatt hour for the first half of this year. This is 3.2 percent above the average price this time last year.

New England, however, saw prices rise significantly more than the national average. Since last year, prices have risen 11.8 percent, the highest of any U.S. region. The Mid-Atlantic states also saw huge price increase as electricity rates have jumped 6.7 percent over prices during the same time last year.

In New England prices jumped after wholesale power prices were 45 percent higher during the first half of 2014 than the same period last year to $93 per megawatt hour. New England utilities have been trying to rapidly expand their energy infrastructure to get more energy to households and businesses, according to EIA, which is part of the reason for the prices hikes.

During last winter, New England saw natural gas prices skyrocket during the “polar vortex” as pipelines and other energy transport methods were inadequate to cost-effectively get power and heat to where it was needed. Utilities across the East Coast worry that another bad winter, coupled with closing power plants could overwhelm the region’s energy supplies.

“Last winter’s generator performance—when up to 22 percent of the utility PJM’s capacity was unavailable due to cold weather-related problems—highlighted a potentially significant reliability issue,” according to a PJM planning document. The utility serves 13 eastern states and the District of Columbia.

“PJM’s analysis shows that a comparable rate of generator outages in the winter of 2015/2016, coupled with extremely cold temperatures and expected coal retirements, would likely prevent PJM from meeting its peak load requirements,” the document noted.

Coal plants are being shuttered across the country because of more onerous U.S. Environmental Protection Agency regulations. These regulations put limits on pollutants, air particles and even carbon dioxide emissions from coal plants — which are rendering many plants to be uneconomical.

EIA data shows that the Pacific Coast states — California, Oregon and Washington — saw their average residential electricity price drop 2.5 percent during 2014 compared to the same time last year.

But EIA notes that the decline is “distorted by a temporary dip in revenues for California utilities during the month of April” which stems from greenhouse gas emissions credits averaging about $35 — which is tied to household electricity bills.

The state’s “Climate Credit” is money credited towards a household’s utility bill twice a year. The idea is to offset higher utility bills resulting from California’s push to put more green energy on the grid and tax carbon dioxide emissions from fuels, power plants and industrial facilities.

EIA says that when the credit is excluded from analysis, West Coast electricity prices actually rose 0.9 [percent from last year. Californians alone saw their prices rise by one percent since last year.

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