Pertinent to rate design debate, variable falling further behind fixed cost
The public naturally believes that most electric utility costs are variable, if only because utility bills are mainly based on per kilowatt-hour rates. Utilities' fixed costs, for generation, transmission and distribution infrastructure, are largely invisible to the average person.
You will see that this house everywhere is generously supplied with these outlets. They give life to a variety of electric devices, and make it possible for them to be used wherever and whenever they are needed. They are the source of much pleasure and convenience.
But today, with the electricity cut off, they might as well not exist...
If we listen to the talk of the people we shall hear them say over and over again: "Never did we realize before that electricity played such an important part in our lives."
In March 6th Democratic debate, the candidates clashed over climate change plans.
Continuing from yesterday's column. You might find of interest this excerpt of the March 6th Democratic debate.
The presidential candidates finished their food fight over fracking. Then they clashed over climate change plans:
CNN's Anderson Cooper: Senator Sanders ... there are a number of Democratic governors in many states who say that fracking can be done safely. And that it's helping their economies. Are they wrong?
Friday’s data release from Labor Dept.: what are similar expenses to electric bills for the average household?
This week's columns have analyzed the brand new Labor Department data on how much American households spent on everything during the year ending June 2015, including electricity.
The semi-annual Consumer Expenditure Survey is the source for understanding Americans' electric bills by region, income, age, urban/rural, etc. The government actually asks many thousands of households each quarter to track every single purchase. The credibility and detail, especially through mining the micro-data, is unequalled.
Flaherty, Fama, Hyman, Kirsch, Morey, Jensen, Hemphill, Patterson, Reiter, and also Orson Welles and Pete Townshend.
Tom Flaherty, top expert on utility mergers, on the dramatic consolidation that’s taken place and still coming. In your June issue of Public Utilities Fortnightly. Must-read.
Jim Fama, industry leader on cybersecurity. His thoughts on his last day as Edison Electric Institute vice president for transmission and distribution, with a very active retirement ahead. Also in the June issue, also must-read.
2016 could place in fifth or sixth or seventh place. Behind 2010, 2011, 2014, 2015 for sure, possibly 2013, 2007 as well.
In the first quarter of 2016, electricity sales to residential customers were 346.8 million megawatt-hours. This was well below sales in the first quarter of 2015. And well below sales in first quarter of 2014.
Q1 2016 sales were 8.3 percent below sales in Q1 2015. And they were 10.9 percent below sales in Q1 2014.
Sales in March, the last month of the quarter, were particularly low. They were 14.4 percent below March 2015. And 12.4 percent below March 2014.
The falling percentage of electric bills has freed nearly 1% of consumption expenditures since the 1980s.
Last week, the Commerce Department's data for the Gross Domestic Product again highlighted electricity's affordability. Residential electric bills in May were 1.40 percent of personal consumption expenditures nationally.
This compares to 1.46 percent in May 2015, 1.43 percent in May 2014, and 1.43 percent in May 2013.
And compares to 1.40 percent in April 2016, 1.36 percent in March 2016, 1.39 percent in February 2016, and 1.41 percent in January 2016.
Bottom line? Residential electric bills have been consistently moderate for a while.
On August 12, the Labor Department published the Producer Price Index data through July 2016. Price trends are still good for electric and natural gas consumers. And price levels are historically favorable for consumers.
But the four monthly data series we track, from three federal departments, Labor, Commerce and Energy, are beginning to tell us something new.
But first, what did the Producer Price Index have to say?
Electric bills are around four percent of expenditures for low-income households versus around two percent for high-income households
Today we continue to mine the mother lode, the Labor Department’s Consumer Expenditure Survey. In extraordinary detail, it reports what households spent last year for everything.
Let’s look at electric bills by income. There are fascinating implications for utility regulation and policy.
As we wrote last week, a household’s electric service averaged $4.00 daily. Or 2.6 percent of all consumer expenditures.
Nov. 22, 2016: It feels like electric utility service is less costly than it was. This feeling, a reality, is backed up by Consumer Price Index trends.
The Labor Department has been tracking the prices of the goods and services that consumers typically buy, including electric service, since 1913. It’s interesting, though not too relevant to today, that electric service costs 4.6 times what it did in 1913, while consumer goods and services overall cost 23.9 times what they did back then. Comparing 2015 to 1913 annualized.
Electricity is far cheaper now.