Get ready for a more expensive electric bill as prices surge
By Daniella Genovese | FOXBusiness
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Summer is right around the corner, which means jamming up those air conditioning units. However, with the cost of energy rising, cooling down the house in the midst of the sweltering summer heat is going to cost more than usual.
The U.S. Energy Information Administration (EIA) estimated that on average there will be an increase of 3.9% in the price of electricity for U.S. households this summer. For the entire summer, the agency projects that the average household is expected to spend 0.9% more for electricity compared to summer 2021, according to the EIA.
"The higher price is largely driven by supply and demand," Nick Loris, vice president of public policy for C3 Solutions. "Particularly with natural gas, which provides 38% of our electricity needs, we've been operating in an environment of constrained supply and higher demand."
When the pandemic hit, "prices were low and remained low, so there was not much of an incentive to supply more," Loris said. "As the economy opened back up, demand increased and outpaced supplies. Russia's invasion of Ukraine made things worse."
In particular, experts "are warning it could be a particularly expensive summer for the northeast," Loris added.
The EIA, which broke down estimated price increases per region, estimated that New England will get hit the hardest. Households in the region are estimated to pay 16.4% more this summer, according to the agency's estimates. Meanwhile, households in the Mid-Atlantic are projected to pay 8.4% more this summer, and households in the South Atlantic are estimated to spend 6.5% more, according to the EIA.
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Utility companies are already issuing warnings to customers ahead of the summer months.
"With New England’s heavy reliance on natural gas to fuel electricity needs, the continued high global demand for natural gas and rising prices worldwide are also driving increases to electric supply rates here," Eversource Energy, which serves customers in Connecticut, New Hampshire and Massachusets, told FOX Business.
On top of that, the company also noted that the electric supply rate for customers is regularly adjusted twice per year, and the next proposed adjustment, which has to be approved by regulators in each respective state, is coming up on July 1 for Connecticut and Massachusetts and on Aug 1. for New Hampshire.
For instance, in Connecticut, the current rate is 11.57 cents per kWh. The proposed rate would be pushed up to 12.19 cents per kWh, pending approval.
"As a regulated energy distribution company, we purchase power for our customers on the competitive wholesale market — with prices driven by increases or decreases in demand along with other global market forces," Eversource Energy said. "This cost is directly passed through to customers with no profit to the company and is subject to review and approval by the appropriate regulatory agency in each of our respective states."
Additionally, the Pennsylvania Public Utility Commission (PUC) issued a warning earlier this month that "most utilities will be adjusting their prices for electric generation on June 1." Many customers, "will see sharp increases in energy costs as summer approaches, ranging between 6% and 45% depending on their electric utility," the PUC continued.
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This price change and increased use of electricity typically seen during summer "make this a very good time for consumers to evaluate their energy options," PUC said.
The PUC is encouraging customers to "carefully review their electric bills to understand the rates they will be paying" ahead of June 1.
Meanwhile, Consolidated Edison Inc., which provides energy for roughly 10 million people who live in New York City and Westchester County, also estimated that summer bills, between June through September, will be higher.
The company estimated that residential bills in New York City will be between 11-12% higher than last year. In Westchester County, summer bills for residential customers are projected to be about 15% higher.
Last year, a New York City residential customer who was using 350 kwh per month from June to September had an average monthly bill of $104.05, according to ConEd.
Meanwhile, a residential customer in Westchester County using 500 kwh per month during the same period had an average monthly bill of $133.02, according to ConEd.
