If you read yesterday’s column, you know the federal government's latest Consumer Price Index report found the overall CPI rose 2.9 percent over the twelve months ending June. And, the electricity CPI fell by 0.1 percent.
This means the real price of electricity, “real” when we figure in inflation, has fallen substantially.
Now let’s dig into the numbers, regionally, and historically.
In the northeast, the overall CPI rose 2.6 percent over the last twelve months. While the electricity CPI rose 2.2 percent. That’s less than the overall CPI but not by much. So the real price of electricity fell in the northeast, slightly.
Over the long-term, the northeast’s real price of electricity has fallen substantially. For example, since the federal government’s base period in the early eighties, the electricity CPI has risen just 78.7 percent as much as the overall CPI. In other words, for the consumer in the northeast, electric rates are considerably less expensive than they were in the early eighties.
In the south, the overall CPI rose 2.7 percent over the last twelve months. While the electricity CPI fell 1.1 percent. That’s a big difference, a 3.8 percent difference. So the real price of electricity fell in the south, by a lot.
Over the long-term, the south’s real price of electricity has also fallen substantially. Since the federal government’s base period, the electricity CPI has risen just 79.4 percent as much as the overall CPI. As in the northeast, for the consumer in the south, electric rates are considerably less expensive than they were in the early eighties.
It’s only in the west that electric rates have increased in real terms long-term. This is attributable to the decreasing share of low-cost hydro in western power generation, rate trends in the west’s largest state (California), and other factors too.
The midwest is more like the northeast and south. Overall CPI rose 2.5 percent in the last year. Electricity CPI fell 2.3 percent. That’s a very big difference, of 4.8 percent. So the real price of electricity fell in the midwest, by a lot. Long-term, the electricity CPI rose 91.2 percent as much as the overall CPI.
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Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly, and President, Lines Up, Inc.
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