Household electricity bills skyrocket

Household electricity bills skyrocket

Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity.

More electricity use at homes and higher prices are driving up power bills.

Households paid a record $1,619 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate. The jump has added about $400 a year to what households pay for electricity. That’s the largest sustained increase since a run-up in electricity prices during the 1970s.  Electricity is consuming a greater share of Americans’ after-tax income than at any time since 1996 — about $2.50 of every $100 in income at a time when income growth has stagnated.  Greater electricity use at home and higher prices per kilowatt hour are both driving the higher costs, in roughly equal measure:

•Residential demand strongly increased last year to a record high. Air-conditioners and household appliances use less power than ever. A new refrigerator consumes half the electricity as a similar one bought in 1990. But consumers have bigger houses, more air-conditioning and more electronics than before, outpacing gains in efficiency and conservation.

Prices are climbing, too, hitting a record 12.8 cents per residential kilowatt hour so far this year. The increase reflects higher fuel prices and the expense of replacing old power plants, including heavily polluting — but cheap to operate — coal plants that don’t meet federal clean air requirements.

Higher bills are a huge problem for low income families, which opposes a proposed rate hike. Utilities are what people’s budgets start with.  The rate increase is needed to pay for replacing old power plants and making the transmission system more reliable. They reached a tentative agreement to raise rates 7.2% in February, lower than its original 17% request.

The industry as a whole is facing higher costs because we’re retiring our aging fleet of power plants.

The future of energy prices and the upcoming closure of more polluting coal plants make the long-term outlook cloudy for consumers. There are plans to ask for another rate hike next year to cover the costs of new natural gas-fired plants.

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