Energy Dept. forecasts residential electric rates to drop 0.7% in 2016
Residential electric rates haven't decreased year-over-year since 2002 (US average). But the Energy Department forecasts a decrease in 2016.
The forecast was in the Short-Term Energy Outlook that came out last week.
It does project that rates will increase in 2017. The agency expects natural gas prices to rebound and rise in 2017, driving electric rates up with them.
The decrease in residential rates this year will be only the fifth time that the year-over year US average has fallen since 1990. Three of the five times were in the late 1990's.
If the Energy Department's forecast out to 2017 is accurate, residential rates will be 64 percent higher in 2017 than they were in 1990. Is that a lot higher or a little higher?
The compound annual pace of the increase would be 1.86 percent over the 1990 - 2017 period, twenty-seven years. Still, is that a lot or a little?
Let's compare, with the golden standard for measuring price increases, the Consumer Price Index. For the nearly identical time period.
The compound annual pace of the CPI increase was 2.43 percent over the January 1990 - January 2016 period, twenty-six years.
So, while the price of all goods and services that consumers buy is rising 2.43 percent, the price of their electricity is rising 1.86 percent. Sweet.
The PUF Mega Metrics pages of Public Utilities Fortnightly are where we feature these kinds of insightful deep dives, into where the electricity and natural gas industries have been and are going.
Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
