Utilities spent less on energy production, more on delivery in last decade
Major utilities in the United States have spent less on producing energy over the past decade but more on energy delivery, according to a new report from the Energy Information Administration (EIA).
The report found that major utilities spent 4.3 cents per kilowatt-hour (kWh) on electricity delivery in 2020, up about 65 percent from 2010. Electricity delivery includes the money spent to build, operate, and maintain the electric wires, poles, towers, and meters that make up the transmission and distribution system. The costs increased as utilities spent money replacing aging equipment, building infrastructure to accommodate new wind and solar generation, and installing new technologies such as smart meters to increase efficiency, resilience, and security.
However, utility spending on power production decreased 32 percent since 2010 to 4.6 cents/kWh in 2020. This includes money spent to build, operate, fuel, and maintain power plants, as well as the cost to purchase power in cases where the utility either does not own generators or does not generate enough to fulfill customer demand. Spending on electricity production includes the cost of fuels, capital, labor, and building materials, as well as the type of generators being built.
This year, the demand for consumer goods and the energy needed to produce them has been outpacing supply. This, in turn, has contributed to higher prices for fuels used by electric generators, especially natural gas. The increased cost for fuel, capital, labor, and building materials is increasing the cost of power production for 2021.
The U.S. average electricity prices have been higher every month of this year compared with 2020, according to EIA’s Monthly Electric Power Industry Report.
