The Mississippi Energy Institute sponsored this post. MEI President Patrick Sullivan authored the post.
A story last week in the Wall Street Journal was titled "Electric Bills Set to Rise in Summer" reporting how natural gas prices are increasing heading into the hottest days of summer with peak air-conditioning demand. Electric bills typically increase slowly over time but have gone through a relatively dramatic increase across the country over the past four years. Why have electric bills risen more sharply in the last few years?
The primary reason appears to be
historically high inflation during the Biden Administration. The 2
charts below show average electricity rates ($/kwh) for the U.S. (top
chart) and southern states over the last 10 years. (source: U.S. Bureau
of Labor Statistics) The steep electricity rate increases immediately
follow the sharp inflation growth of a few years ago. Also, high natural
gas prices in 2022 contributed to the sharp increase that year.
A few relevant points more specific to MS:
-
Electricity rates in the set of southern states are about 13% lower
than the national average, and MS electricity rates remain below the
southern states average.
- More electricity than ever is being
generated with natural gas and on the rise, so going forward, natural
gas prices will have a greater impact on electricity prices than ever
before. In recent years, we've had historically low natural gas prices
with supply outpacing demand. WIth natural gas for electricity demand
increasing and U.S. natural gas exports increasing, natural gas prices
are expected to increase over time. The question is 'how little?' or
'how much?'. (In a few years, the 2009-2016 period when the U.S.
government tried its hardest to regulate coal out of electricity
production may be noticeably regrettable.)
- Almost 80% of
electricity generated in all of MS comes from natural gas plants. Most
of the remainder is nuclear (Grand Gulf) with a very small percentage
from coal and solar.
- The tech economy and energy-intensive
manufacturing are demanding enormous volumes of electricity to operate
data storage centers and other facilities. Some point the finger at data
storage as the reason for local rate increases, but the data tends to
point to recent years' inflation with increased industrial
-
Specifically, the data storage project in Madison County will require
new natural gas generating facilities while adding a mega-sized customer
to share in system costs for years to come. This is basic economies of
scale and good for existing customers on that system. (For Madison Co
residents, the windfall of local tax revenue from the project likely
results in no need for property tax increases in our lifetimes.)
-
The pace of electricity demand growth and associated
industrial opportunities requires new ways of thinking about meeting
energy demands. The data storage project in Madison County simply did
not have the time to go through the long, conventional pre-project
review process. Similar, more streamlined regulatory processes specific
to industrial demand may need to be considered in years ahead.
-
What about nuclear? Nuclear is a great way to generate electricity as
Grand Gulf has demonstrated but is not a near-term solution, requiring
15+ years to plan and build and many $$ to get there. A new nuclear
project in MS would be a great investment for the next 2 generations of
Mississippians and should happen but will come with costs.
-
Bottom line, the U.S. electricity sector and electricity demand is
different than it ever has been, largely due to demand as a result of
our collective data usage and lifestyles. Electricity looks to be the
currency for economic growth, an opportunity for MS. MS should strive to
remain a low-cost electricity state while concurrently seeking
reasonable ways to meet industrial demand and attracting additional
valuable investments.
11 comments:
Propaganda.
AI is going to drive it all through the roof. Power consumption required is nuts.
My buddy has these little chips they use in the meters of government buildings and rich, well connected people with really big houses. When I bought my new house, I paid him $200 and he swapped out chips in mine. My electric bill has been less than half of my previous smaller house ever since. Thankfully, nobody walks up and checks the meters anymore. Who knew there was a two-tier utility payment system.
Tater has his nose so far up the energy cartel's behind he can't breath. Bills will go up, not down.
12:38, I can log into those bootleg chips at will and monitor anything going on in your house, so be careful what you say or do…
The cost of operations at a utility has increased dramatically, and those costs get passed through to the consumer. Also, many electric utilities still have defined benefit pension plans. When you can recover all costs and get a guaranteed rate of return things are not too hard to manage.
It's the tariffs.
Google your Co-op's name and 990 Form, those salaries are BS
@3:26 pm. The tariffs were just recently added/increased. The impact of the tariffs is just beginning.
odd there’s one reason he doesnt mention
https://www.globalchange.gov/indicators/us-surface-temperatures
It's interesting to track gas and oil prices and how " seasonally" consistent they are. Raise them when they are most used rather than to have a consistent level ratio of cost to profit.
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