Electricity prices rise faster than inflation

Source: By Zach Bright, E&E News • Posted: Sunday, April 14, 2024

Industry groups say transmission costs drove the 5 percent annual increase.

U.S. map with electrical plug.

Claudine Hellmuth/POLITICO (illustration); bowonpat/Freepik (outlet and plug); Calsidyrose/Flickr (grid paper)

Electricity prices are rising faster than the annual inflation rate — and industry groups say transmission costs are largely to blame.

The Bureau of Labor Statistics found that electricity prices rose 5 percent over the past year. That’s higher than the overall consumer price index (3.5 percent) and any other single commodity, like food (2.2 percent) and gasoline (1.3 percent).

Industry groups say the building and siting of power lines is what’s driving the increase. More than 500 transmission projects came online last year, spanning 4,000 miles, and the country will need many more connections to meet rising energy demands while decarbonizing the grid.

Grid operators are seeing transmission account for an increasing proportion of consumer costs. PJM Interconnection, which serves 13 states in the eastern U.S. and is the country’s largest power market, said transmission costs made up 28 percent of its wholesale electricity prices last year, compared with just 9.4 percent a decade earlier.