EIA report finds electricity price rise linked to delivery, power production costs
The U.S. Energy Information Administration (EIA) released a report this week identifying rising delivery costs and falling power production costs as the lead drivers between the past decade’s electricity prices.
The report noted this as an offset to ongoing concerns from some corners that electricity prices have not reflected the costs of fuels used to generate it. Between 20006 and 2016, the average retail price electricity in the United States has risen about 1.5 percent per year, while natural gas prices have fallen an average of 8.4 percent each year.
For electricity costs, a number of items factor in. Generation, transmission, and distribution are key, of course, but so are plant operation and maintenance costs, fuel costs and the costs of purchasing power from smaller operations. All of this is filed away under power production costs, which have decreased from around 69 percent to 54 percent over the years.
Outpacing this, however, has been the cost of delivering that electricity to consumers. At modern rates, those costs have risen from 2.2 cents per kilowatthour (kWh) in 2006 to 3.2 cents/kWh in 2016. As aging infrastructure is replaced with new equipment that allows utilities to repair faulty lines remotely, read meters remotely and more quickly address issues of neighborhood reliability problems and outages with customers, costs have risen.
Administrative and general expenses have also gone up 20 percent since 2006, but the EIA notes these cover a much smaller portion of overall electric costs.
