U.S. Electricity Prices on the Rise

June 1, 2006
With all the news about the recent rises in oil, natural gas and gasoline prices it should come as little surprise...

With all the news about the recent rises in oil, natural gas and gasoline prices it should come as little surprise that the national average price of electricity in the United States rose by a stunning 10.9 percent during the period of April 2005 to April 2006.

The annual survey conducted by an independent consulting company, NUS Consulting Group of Park Ridge, N.J., found that the average price of electricity in the United States was 8.82 cents per kilowatt-hour (kWh) as of April 1, 2006, compared with 7.95 cents per kWh in April 2005. The survey sampled 24 of the largest investor-owned electric companies in the country using an industrial model of monthly usage totaling 450,000 kWh with a monthly demand of 1,000 kW. The survey model also assumed an operating power factor of 85 percent and customer-owned transformation equipment.

As with past surveys from NUS Consulting, the study found customers in New York, New Jersey and California still pay some of the highest electricity prices in the country. However, in 2006, customers in Texas also joined this group as electricity prices in their state rose by over 40 percent in just one year. The top five surveyed utilities in terms of price included Consolidated Edison (NY) at 14.56 cents/kWh, Reliant Energy (TX) at 14.01 cents/kWh, Public Service Electric & Gas (NJ) at 12.72 cents/kWh, Texas Utilities (TX) at 12.33 cents/kWh, and National Grid (NY) at 12.09 cents/kWh.

The largest price escalation over the past year occurred in Texas as Texas Utilities customers witnessed their electricity bills increase 46.4 percent. Other utilities with notable increases included Reliant Energy (TX) at 42.3 percent, Florida Power & Light at 28.7 percent, Public Service Electric & Gas (NJ) at 28.4 percent, and Progress Energy (FL) at 24.3 percent.

The survey found the lowest priced utilities included Dominion Power (VA) at 5.18 cents/kWh, Ameren UE (MO) at 5.46 cents/kWh, Duke Power (NC) at 5.46 cents/kWh, Ohio Power at 5.50 cents/kWh, and Xcel Energy (MN) at 5.73 cents/kWh.

As demonstrated in previous surveys, the highest power prices can be found in those states that have deregulated their retail electricity markets. Considered in the past by many as a means of lowering electricity prices, the central promise of deregulation has yet to be fulfilled for many consumers.

“The survey really shows the interconnection of the energy markets,” said Richard Soultanian, Co-President of the NUS Consulting Group. “Simply stated, as world oil prices rise so do the natural gas markets followed by the electricity markets.

“Those people looking for some level of relief need to understand that higher prices are here to stay and one needs to take matters into their own hands rather than to wait for some magic reduction in market prices. Contrary to the popular expression, good things do not always come to those who wait.”

NUS Consulting specializes in developing programs to reduce energy and telecommunications expenses. Its expertise includes bill audit and verification, rate analysis and optimization, open-market procurement services, technical and engineering support, market and pricing studies and utility industry consulting. More information on the company may be found at www.nusconsulting.com.

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