On Sept. 8, the extraordinarily comprehensive annual survey by the U.S. Labor Department on what American households spend money on, reported that the average residential electric bill in 2022 was $140.25 per month.
Yesterday’s column focused on what the survey said about regional differences in residential electric bills. Today’s column dives into another difference that affects how much households pay for electricity.
Suppose you split up five ways the hundred and thirty-four million households in the country by income. The twenty-seven million with the lowest income, the twenty-seven million with the next lowest income, and so on. Do so and you find big differences in the average residential electric bills of these income quintiles.
In 2022, the average residential electric bill per month was $100.42 for the lowest-income quintile and $182.08 for the highest-income quintile. The average electric bills for the three income quintiles in-between the lowest and highest were $127.25, $138.67, and $152.92.
Clearly, average electric bills are very much correlated with income. The higher household income is, in general, the higher is a household’s electric bill.
Those regional differences we talked about yesterday muddy up the waters, however, if we stick with an analysis of household income and electric bills across all the regions. This is why I prefer to compare the average electric bills of income quintiles region-by-region.
For example, fifty-two million households are in the South. That’s a whopping thirty-nine percent of all households nationally.
Southerners tend to pay higher electric bills than elsewhere in the U.S. The warmer climate drives up their air conditioning usage.
Over the two-year period of 2021-22, households in the South with income before taxes of less than fifteen thousand dollars per annum, and those with income of fifteen thousand and more, but less than thirty thousand, averaged monthly electric bills of $118.75 and $129.92 respectively.
In contrast, those with income of a hundred and fifty thousand and more, but less than two hundred thousand, and those with income of two hundred thousand and more, averaged electric bills of $174.33 and $205 respectively.
These big differences in average electric bills result in even bigger differences in electricity’s share of total household expenditures.
For households with income below fifteen thousand, electricity’s share of household expenditures was 4.9 percent. For households with income of fifteen thousand and more, but less than thirty thousand, electricity’s share was 4.4 percent.
For households with income of a hundred and fifty thousand and more, but less than two hundred thousand, electricity’s share was 1.9 percent. For households with income of two hundred thousand and more, electricity’s share was 1.5 percent.
This is just the tip of the iceberg. We’re analyzing all the regions, not just the South.
And all the interesting breakdowns, not just income. Such as how the electric bills of households headed by older Americans compare to those of younger-headed households. And such as how the electric bills of renters compare to those living in homes they own.
So, stay tuned. Future columns will explore the remainder of the iceberg.