🚨 Electricity Prices Really are Getting Outrageous
The price of electricity grew by over +7% in the last 12-months, and it will probably keep getting worse.
Most of my career in government focused on reducing energy usage and utilities costs in federal buildings in the Midwest. At that time (early 2010s), the Midwest was blessed with the lowest energy prices in the country. It wasn't uncommon for commercial accounts to be paying $0.05 per kilowatt hour (kWh) back then, and the shale gas boom in the mid 2010s kept electric prices very low for a long time. It is true that residential prices have always been higher than commercial prices, but the prices people are suddenly reporting are quite shocking. 1
Videos on electricity prices seem to go viral every week, and the data backs it up: The Bureau of Labor Statistics reports that electricity is now nearly $0.20/kWh nationally. That’s a +42%(!) increase from January 2020.
To me, this moment feels a little different than it did during the post-pandemic inflation surge:
AI related electricity consumption is not slowing down. In fact, some people argue that the AI datacenter boom is basically preventing a recession. The implications and expectations of the AI boom were not at all clear early in the post-pandemic world.
Electric prices are suddenly growing faster than incomes. During the end of the pandemic inflation surge, incomes generally grew very fast to cover higher living expenses, but no more.
Policy is constraining electric supply growth (remember higher demand + lower supply = higher prices). In the immediately post-pandemic world, policy was heavily supporting new electric supply from the fastest growing electric sectors (wind + solar). A lot of that policy support has been reversed. Nuclear is the one bright spot.
The good news is that there are a lot of programs out there to help reduce energy usage and costs. Take advantage of them, and don’t hesitate to reach out for advice or consulting on energy efficiency.
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