When Electricity Becomes Cheap. What Then?

When electric utility service becomes cheap, what are we to do? For so long, we in utility regulation and policy have concerned ourselves with electricity's expense. What if it becomes cheap? What then? 

When electric utility service becomes clean, what are we to do? For so long we have concerned ourselves with electricity's environmental impact. What if it becomes clean? What then? 

Until recently, these were academic questions. Many in our field believed electricity's expense was affordable and its environmental impact acceptable. Critics disagreed. 

They are academic questions no more.

ABB Market Intelligence Workshop September 13, New York

The latest Commerce Department report on the gross domestic product came out Friday. PUF's analysis shows just 1.30 percent of American's consumer expenditures in August were for electric bills. 

Going all the way back to January 1959 - in 704 months - consumer expenditures on electric bills were a smaller percent only twice. And that was in this January and February.

In 2017 year-to-date, electric bills are at an all-time low of 1.32 percent of expenditures. 

How does that compare to recent years? It was 1.38 percent in 2016 to-date, 1.46 percent in 2015 to-date, 1.49 percent in 2014 to-date.

As recently as August 2010, electric bills were 1.67 percent. That's 28 percent higher than August 2017. And in August 1995, electric bills were 1.94 percent. That's 49 percent higher than August 2017. 

As for electricity's environmental impact, the percent of the grid's electricity that is zero-carbon rose to an all-time high of 41.6 percent in March. The percent that is high-carbon fell to an all-time low of 23.7 percent last March. There's a clear trend towards clean (assuming nuclear generation levels hold steady).

Again, that question. If electric service is cheap and clean, what then?

Check out the ten-page PUF Quant Services pullout in every monthly PUF 2.0 for our unique in-depth analysis of trends in electricity. 

ABB Market Intelligence Workshop September 13, New York

 

Courtesy of the magazine for commentary, opinion and debate on utility regulation and policy since 1928, Public Utilities Fortnightly. "In PUF, Impact the Debate."

Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly

E-mail me: mitnick@fortnightly.com