Power Biz 101
Electricity Prices Remain An Excellent Value.
Electricity prices—unlike the prices for most other common consumer goods—did not keep pace with the rate of inflation for many years, despite an ever-increasing national appetite for electricity. In fact, from 1985 to 2000, electricity prices rose, on average, by 1.1 percent per year, while inflation rose at a rate of 2.4 percent per year during this timeframe.
Even with recent price increases, the growth rate for electricity prices remains comparable to, and even lower than, other important goods. The price of one kilowatt-hour of electricity (in nominal dollars) has increased by just 27 percent since 1985, while the prices of most other consumer goods have risen at much higher levels. This evidence points to an industry that has become more efficient itself—both in management and in technology.
Material in this section from Key Facts About The Electric Power Industry, courtesy of Edison Electric Institute, 701 Pennsylvania Avenue, N.W., Washington, D.C. 20004-2696, www.eei.org.
Gregory Basheda, Marc W. Chupka, Peter Fox-Penner, Johannes P. Pfeifenberger, and Adam Schumacher, The Brattle Group,"Why Are Electricity Prices Increasing? An Industry-Wide Perspective." Prepared for The Edison Foundation, June 2006, p. 5.