Electricity's Price, Really

Posted April 18, 2017:

The Consumer Price Index for electricity increased 1.6 percent from March 2016 to March 2017, per Friday’s Labor Department release. The overall CPI, for all goods and services, increased 2.4 percent.

If the CPI for electricity increased at the same percentage as the overall CPI, then the real price of electricity (that is, adjusted for inflation) would be the same as it was a year ago.

But it didn’t. The CPI for electricity increased at a significantly lower percentage, 1.6 percent versus 2.4 percent.

This means the real price of electricity paid by U.S. households is significantly lower than it was a year ago.

Electricity’s price fell a lot in the Northeast, Midwest and West.

In the Northeast, the CPI for electricity decreased by 0.3 percent, while the overall CPI increased 2.2 percent.

In the Midwest, the CPI for electricity increased by 0.7 percent, while the overall CPI increased 1.9 percent.

In the West, the CPI for electricity increased by 1.7 percent, while the overall CPI increased 3.1 percent.

The larger the gap between the CPI for electricity and the overall CPI, the greater the fall in electricity’s price.

In the Northeast, the gap was 2.5 percent. In the Midwest, the gap was 1.2 percent. In the West, the gap was 1.4 percent.

Since the Labor Department’s base period of 1982 – 1984, the CPI for electricity has increased 84.4 percent as much as the overall CPI.

This means the real price of electricity has significantly fallen in recent decades. More on this in tomorrow’s essay.


Number-crunching and insights by the magazine for commentary, opinion and debate on utility regulation and policy since 1928, Public Utilities Fortnightly.

Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
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