U.S. Residential Electricity Prices Trending Up

Residential electricity rates have risen 1.93% from 1992 to 2010 on a compounded annual basis, which compares favorably with the rate of inflation over the same time frame. Nevertheless, the trend remains up.  From Texas to California to Tennessee, concern over rising rates remains high.

The chart below from The Energy Information Administration shows the monthly average electricity rate in the U.S. from 2000-2010 with projections through 2012.  Annual growth rates are graphed at the bottom.  Note the annual growth rate (not compounded growth rate) was much higher through the first part of the decade.  However, projections of 0.6% and 0.7% in 2011 and 2012 appear unusually low by comparison.

Added to the EIA chart is the red price channel.  Price channeling is a stock market charting technique, but used here to illustrate that electricity rate projections are predicted to remain near the bottom of the channel the next two years.  Is this a reasonable expectation?  Not likely.  In light of current expansionary monetary policies, price increases in the commodities and raw materials used in electric generation will push electricity prices above the 0.7% expected increase.

Colorado electric consumers have third lowest residential bills in nation

There is an interesting article in the Denver Post Sunday titled, "Xcel electricity rates up 21 percent in Colorado."  Although accurate, the article is misleading.  It creates the impression electric utility rates in Colorado are high and getting higher.  By Colorado perspectives, rates are rising.  From a national perspective, many states would be happy to swap places with Colorado. 

The paper reports Colorado residential customers pay an average of $68 a month for electricity.  Although the article mentions that Colorado's rates remain below the national average, it fails to mention just how far below the national average.  When looking at rates only, Colorado ranked 29th in the nation in lowest residential rates, with an average residential retail price of 11.19 cents/KWH compared with the national average of 11.62.  However, the residential consumers in Colorado pay some of the lowest bills in the nation.

According to 2009 data from U.S. Energy Information Administration, the latest for which monthly bill information is available, the Colorado average residential bill of $68 a month ranks as the third lowest in the nation.  Only New Mexico and Utah, with average residential bills of $64.30 and $66.16 respectively, rank lower.  The average monthly bill in the Mountain Division of the Census region is $89.38.  The region includes Arizona, Idaho, Colorado, Montana, Nevada, New Mexico, Utah, and Wyoming.  Colorado's average monthly bill is 23% below the regional average and 34% below the national average of $104.52.  Even if Xcel were to raise its rates another 20% over the next six years as Xcel proposes, the average monthly bill would be only $82.43, still far below the current national average.

Google provides insight into customer concerns

Google Insights can provide "insight" into what's on the minds of electric customers.  The search engine allows Insight users to see trends in search terms and phrases.  For example, the number of users searching the phrase "electricity rates" has been increasing since 2004 as shown in the graph, indicating, perhaps, increasing concern about rising electric rates.  Google Insights also allows for the narrowing of data by specific geographic location, search category, and time frame.  Once a seach term is selected, those geographic regions most active for that particular term are ranked. 

For a more recent trend on a particular search term, Google Insights can narrow the time period to the most recent 12 months, 90, 30, or 7 days, or make comparisons from year to year.  Below is graph of the most recent 12 months.

One should try various seach terms to get a better understanding of customer concerns.  For example, related searches according to Google Insights include the "cost of electricity", "electricity costs", "electricity bill", and "electric bill" just to mention a few.