Why Is My Electric Bill So High?

5 Reasons the Utility System Owns You (and How You Can Turn the Tables on Them)

Does it feel like your electric bill just gets higher and higher every year?

That is because IT DOES.

high electric bill are killing the budgets of homes and businessesHigh electric bills are killing the budgets of average American homes and businesses. All your hard work clicking coupons and searching for the best deals is getting wiped out by high electric bills.

But why do electric bills increase? And can we do anything to stop them? If these questions have been nagging you every time you grumble about another power bill that’s too high compared to a few years ago, your answers are here.

First though – how much are electric bills increasing?

According to the EIA (Energy Information Administration), in 2014 the average monthly energy bill was $114.09. This was based on averages of 911 kWh used at a cost of 12.52 cents per kWh. In 2013, just one year before, it was $110.21. That’s a whopping 3% electric bill increase in just one year.

If it went up 3% every year, then in ten years, you’d be paying over 30% more for the exact same amount of energy. Pretty lame, right? But do they have a good reason for giving you such high electric bills? Now’s the part where you might get a little angry…

Why High Electric Bills Are Here to Stay

Here are 5 reasons why you better get used to absurdly high energy bills.

1. Government Regulations

Regardless of your political affiliations, the effect of ever more burdensome regulations on energy production is clear: Energy bills are skyrocketing. California is the worst at this (more on the Golden State a bit later). These regulations touch everything from toxic emissions from coal and natural gas plants to greenhouse gas reduction goals to mining regulations.

A clean environment is a good thing (and one of the best byproducts of solar). But it is costing you big money on your electric bill to get it.

2. Natural Gas Price Fluctuations

Natural gas has become the new go-to fossil fuel, leaving coal in the dust. There are lots of reasons for this that we don’t have room for here. But this matters, because natural gas prices change a lot more than coal. They go up and down based on current reserves, difficulty of extraction, demand, and many other factors.

So – when the utility system gets stressed, like with these recent ice storms across the Northeastern US, natural gas supplies run low, and you get stuck with a high electric bill. Like, really high. One LA Times story referenced a homeowner who got stuck with a January 2014 power bill of $1250. For one month! Can you imagine?

The utility system got overtaxed during a big storm, and couldn’t handle the demand. Natural gas supplies ran low, and other problems combined with that to send energy rates through the roof.

The bottom line: When energy resources dwindle – you pay.

your high electric bill is happening because coal plants (like this one) have been closing but don't have an affordable large-scale replacement

3. Coal Plants Closing

Partly because of the increasingly strict regulations, but also because natural gas and solar generation are both better deals, many states are shuttering coal plants.

The problem – coal remains the most cost-stable form of energy for mass populations. So they’re removing the most stable source of energy, and replacing it with cost-unstable ones. The result: higher electric bills.

4. Nuclear Plants Closing

Nuclear plants have aged, and because of mostly unfounded fears, there hasn’t been enough support from government to keep them operating. Like coal plants, a single nuclear power plant provides gobs of energy. Shut it down, and it costs a lot to replace all that zero-emission power.

But they’re doing it. And that means your electric bills increase again.

What these two plant-closing trends have in common is this: Utilities are closing and de-prioritizing energy sources that we don’t like anymore, but they’re doing it before we have enough of cost-effective replacements to meet the same level of large scale demand. Result: Higher bills for you.

5. Renewable Energy State Mandates

Sometimes these get decreed from state governments. Sometimes the voters vote them in. But whatever the cause, more and more states are requiring utilities to supply certain percentages of their energy from renewables.

This is great for the long term. But switching energy production systems is costly when doing it on the scale that we’re talking about. So when your utility puts in a wind farm or a huge solar array, they pass those costs on to you. Your electric bill goes up again.

California, for example, has required 33% of their power to come from renewable energy by 2020. This is one reason California’s electricity bills are expected to increase by 47% in the next 16 years, according to an Energy + Environmental Economics report. 47%!

What Does All This Mean for Homeowners?

Add it all up, and you’ll be paying hundreds or thousands of dollars more to use the exact same amount of energy in the next ten years. The EIA study projects your electric bill will increase by about $750 in the next ten years. But that’s a low estimate when you consider the trends you just read about. More regulation, fewer reliable sources of power, increasing mandates – your high electric bills aren’t going anywhere except higher.

Back in that LA Times article, one expert puts it in very simple terms:

“The trend line is up, up, up.”

What Can We Do About Ridiculously High Electric Bills?

Conservation is good. Don’t leave the lights on all over your house. Don’t wash laundry with half empty loads. Don’t leave your heat at 80 degrees in December just so you can walk around in your underwear. These are no-brainers, and a lot of Americans could stand to use more wisdom in their energy use.

But even with sensible conservation measures, we hear stories all the time of people who go to great lengths to reduce their energy use, and their power bills still go up!

Why? Because the electric bill increases caused by the five trends you just read about are greater than any amount of conservation you can do on your own.

The only way to truly escape the endless electricity bill increases that are guaranteed to be part of your future is to take the power, turn the tables on the whole system, and generate your own power.

For homes, solar power is the single best way to do this.

Once you install solar panels on your home and produce your own energy, you are operating outside all five of those insidious and uncontrollable forces and their disastrous effects on your electric bill.

Here’s some simple math:

Suppose your home uses 911 kWh per month.   That’s pretty average.

Then suppose you install a solar energy system that generates 700 kWh per month. Once you install that system, you get that power for free – no new regulations, closing coal and nuclear plants, fluctuating natural gas prices, and state mandates can change the fact that the sun shines

You now only have to pay for 211 kWh. So you’ll still see those increases happening, but it will be on a much tinier bill. Paying 47% more for 211 kWh is a lot better than paying it for 911.

And ten years from now, that 700 kWh per month you’re generating will still be free. And by then, you’ll probably have paid for your solar panels with all these savings, and then some. Because remember, whatever you pay for solar now, that’s a fixed cost. In ten years, you’ll have paid an additional $750 to use the same amount of power as you use today.

Solar power, with the available tax credits, falling prices, and inflation-busting freedom, will grow in value over the years, right along with the high electric bills all your neighbors will still be grumbling about.

 

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