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Between the Lines Explaining the business of your electric cooperative
The Fall and Rise of Electric Rates If you follow the news — including news from your electric cooperative — you know that electricity prices are likely to rise during the coming years. To meet ever-growing demand for electricity to run electronics, appliances, heating, cooling and even cars, utilities nationwide need to build new power stations and distribution systems, re-tool existing plants to meet new standards, and add infrastructure that will accommodate renewable energy sources. Let’s look at the history and context of these rising electricity prices.
Electric rates reflect the nation’s economy In the early days of electricity in 1910, it cost American consumers who could get it about $1.65 per kilowatt-hour (in inflation-adjusted dollars). As demand and production facilities grew, the economy of scale cut average electricity rates in the U.S. by 75 percent by 1940. Favorable economic times and the expansion of rural electrification in post-war America helped reduce rates even further, and by 1973 electric rates nationwide reached an all-time low of 8.9 cents per kwh. (U.S. Energy Information Administration-EIA)
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With $ of electricity you can: Listen to the radio for
117 hours. Make
132 milkshakes in a blender. Toast
1,108 slices of bread.
Light a CFL bulb for
641 hours. Dry your hair
48 times.
As Americans’ appetite Average U.S. Residential Electricy Rates 1920–2010 for electricity continued (in cents per kilowatt-hour adjusted for inflation) to grow in the 1970s and 1980s, utilities built new 60¢ power stations and the grid expanded. It was a 50¢ time of rising fuel and construction costs, as 40¢ well as new environmental regulations affecting 30¢ power generation, and 20¢ these costs were passed through to consumers. 10¢ Appliances became more efficient, and so did the industry’s methods of 2010 1920 1965 producing and distribSources: U.S. EIA, U.S. DOE uting electricity. In the economic boom of the late 1980s and 1990s, fuel prices actuoccasions when we stop to think about ally declined, so electricity rates inched what an affordable value electricity downward as well. Since then, fossil brings to our lives. fuel prices have risen steadily. Between Down the road 2000 and 2010, average electric rates nationwide rose 11 percent in adjusted The EIA projects consumer demand for electricity to rise at an average dollars to 10.46 cents, which is about rate of 1.5 percent per year through where we are today. (EIA) 2030 — North Carolina’s demand By comparison, during the same could rise at a greater pace — with period of 2000–2010, average U.S. gasoverall consumption increasing 45 peroline prices rose 74 percent to today’s cent by 2030. Meeting that demand has cost of nearly $4 per gallon. Closer to its costs. Your electric cooperative’s sole home, in North Carolina from 2000 to mission always has been to provide you 2008, gasoline prices rose an average with safe and reliable electricity. By of 17 percent per year. In comparison, balancing a diverse portfolio of power electricity has increased just 2.1 persupply sources (nuclear, natural gas, cent per year. (N.C. Energy Office). coal, renewables) and managing their own operating costs, North Carolina’s Compare to health care and food costs electric cooperatives will work to keep The rise of electricity rates in the U.S. your rates as affordable as possible as has been gradual compared to the cost these demands grow. of other consumer goods. Using the prices of the day, between 1985 and 2005, This is the third in a series prepared by health care costs rose 185 percent, regular the North Carolina Association of Electric gasoline rose 91 percent, food rose 81 Cooperatives. Next month: Modernizing the percent and electricity rose 27 percent. electric grid. (U.S. Bureau of Labor Statistics) When you consider how reliable What you can do electricity is, the value goes up even Ask your electric cooperative about budget more. Ask yourself: When did I last payment plans. Your co-op also can help you experience a major outage that wasn’t manage your own energy costs. And see how caused by a natural disaster? For much you can save by using the interactive calculator at www.togetherwesave.com most of us, those times are the only
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