Thursday October 12th 2023 The Rising Cost of Electricity in America: Unmasking the Realities

Electricity is a fundamental necessity in our modern world, powering everything from our homes to our businesses.

Yet, for many Americans, the cost of this essential service has been steadily rising, even as the cost of producing electricity has seen significant reductions. This paradox has left many puzzled and frustrated, especially when considering the declining prices of natural gas and coal, which have traditionally been primary sources of energy.

The Discrepancy in Electricity Pricing:

From 2010 to 2022, while the price of natural gas plummeted by 43% and coal prices saw an 11% reduction, the average monthly electricity bill for residential customers in the U.S. surged. In 2022 alone, the average monthly bill rose from $121 to $137, marking a 13% increase. Even after adjusting for inflation, which hit a 40-year peak at 8% in 2022, electricity bills still increased by 5%. This was the most significant annual surge in average residential electricity expenditure since records began in 1984.

Several factors contributed to this rise:

Extreme Temperatures: 2022 witnessed more extreme temperatures, leading to increased electricity consumption for both heating during colder winters and cooling during hotter summers. The average U.S. monthly electricity consumption per residential customer rose by 2%, from 886 kWh in 2021 to 907 kWh in 2022.

Fuel Costs for Power Plants: The cost of delivering fossil fuels like natural gas, coal, and petroleum to U.S. power plants surged by 34% in 2022. These increased costs were inevitably passed on to consumers, resulting in higher retail electricity prices.

Subsidies for Renewable Energy: A significant portion of the savings that could have been passed on to consumers was instead used to subsidize renewable energy sources like wind and solar. While these sources are touted as environmentally friendly, their actual impact on air quality and CO2 reduction is debatable, especially considering the significant reductions in harmful emissions achieved since the 1970s, primarily due to the shift from coal to natural gas.

Transmission Costs and Infrastructure: The nature of renewable energy sources necessitates their placement in remote locations, requiring extensive infrastructure for transmission. This has led to increased costs, evident in states like Texas, which has spent billions on new transmission lines.

Taxes and Hidden Costs: Beyond the visible taxes on power bills, there are numerous federal and state taxes subsidizing the wind and solar industries. From 2010 to 2019, federal subsidies for these industries alone exceeded $70 billion.

As we move into 2024, the average U.S. residential monthly electricity bill stands at $133, marking a 5% increase from the previous year. With summer approaching, households can expect their electricity bills to be roughly similar to the previous year, with a slight 2% increase on average.

It's essential for consumers to be informed and understand the factors influencing their electricity bills. As the debate on renewable energy subsidies and their actual impact continues, it's crucial to consider the broader picture and make informed decisions.

For those facing financial challenges, especially in these trying times, seeking expert advice can be invaluable. Omar Zambrano, Attorney at Law, specializes in bankruptcy and debt, assisting families who are laid off, out of work, or behind on payments. With a commitment to helping you get a fresh start, remember, we offer FREE CONSULTATIONS by CALLING 626-338-5505.

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