Some people around the country and on this board falsely claim that clean electrical energy mandates are to blame for the high cost of electricity around the country. The following article describes what really is the cause of higher cost of electricity around the country in the last 5 years.
emphasized textThere’s no doubt that U.S. utilities have been jacking up the rates they charge their customers.
But rates aren’t the same thing as bills, Energy Innovation’s report cautioned. Average U.S. electricity bills have risen by 24 percent since 2010, well below the pace of inflation, even though electricity rates have on average climbed 40 percent over the same period. That’s because federal and state energy efficiency investments and policies have helped reduce household energy consumption even as electricity rates have gone up.
Energy Innovation
Still, higher electricity costs are a problem. Nearly a third of U.S. households have reported cutting back or skipping necessary expenses at least once to pay for utilities over the past two years, according to surveys from financial services provider LendingTree. Low-income households and people living in poorly insulated or energy-inefficient homes are particularly hard hit.
Electricity rate spikes have been particularly steep in recent years. The U.S. Energy Information Administration reported a 13-percent jump in average monthly electricity bills in 2022, outpacing inflation and constituting “the largest annual increase in average residential electricity spending since we began calculating it in 1984.”
But the federal energy data-tracking agency didn’t attribute that increase to clean energy growth or policies. Instead, it cited “a combination of more extreme temperatures, which increased U.S. consumption of electricity for both heating and cooling, and higher fuel costs for power plants, which drove up retail electricity prices.”
That’s not the line that’s been taken by opponents of clean energy — including those crafting the energy policy blueprints for the presumptive Republican presidential nominee, Donald Trump.
Project 2025, a sweeping policy platform that’s expected to serve as a roadmap for a future Trump administration, calls for ending clean energy subsidies and mandates and increasing fossil fuel extraction and use. The section of Project 2025 laying out plans to end the Department of Energy’s clean energy programs describes efforts to combat climate change as being “used to create an artificial energy scarcity that will require trillions of dollars in new investment, supported with taxpayer subsidies, to address a ‘problem’ that government and special interests themselves created.”
“The result has been increased energy costs that hurt individuals and families, especially low-income Americans and seniors on fixed incomes,” wrote Bernard McNamee, the author of the section of the report, which was organized by conservative think tank The Heritage Foundation. Before serving at DOE and the Federal Energy Regulatory Commission under the Trump administration, McNamee worked as an attorney for fossil fuel companies and at the Texas Public Policy Foundation, a pro-fossil fuel and anti-renewable energy nonprofit funded by oil and gas companies and Republican donors.
But Energy Innovation’s analysis finds that high levels of clean energy do not correlate to higher electricity rates — in fact, quite the opposite. Many of the states with the largest growth in wind and solar generation since 2010, including Iowa, New Mexico, Kansas, and Oklahoma, have seen rates increase more slowly than inflation.
Texas, a leading state in deploying wind, solar, and batteries, is a case in point. Wind and solar there have reduced costs in the state’s wholesale electricity market by $31.5 billion between 2010 and 2022, and by $11 billion in 2022 alone, according to a 2023 report.
Breaking down what’s causing the biggest power price spikes
Nationwide averages mask significant state-by-state differences, the report noted. Between 2021 and 2023, 15 states saw residential rates increase faster than inflation, and two — Massachusetts and California — saw rates increase more than twice the speed of inflation.
While California and Massachusetts both have aggressive clean-energy mandates, that’s not why their rates jumped so dramatically, the report explained. A 2023 report from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory found that the cost of complying with clean energy standards in the 29 states that have enacted them equates to about 3.5 percent of average retail electricity bills.
In the short term, turbulent fossil gas prices have been a “major driver of higher electricity costs in some states,” the report noted. That relationship was made clear in 2021 and 2022, when Russia’s invasion of Ukraine sent gas prices soaring — and drove up electricity costs as a result.
These price spikes are passed through to utility customers in various ways, and can make up a significant portion of residential utility rates, Pierpont noted. In states such as Massachusetts, where 64 percent of the state’s electricity was supplied by fossil gas plants in 2023, households face even greater exposure to these costs.
So, what is driving electricity rates to rise in these states? Climate change — and reliance on the price-volatile, planet-warming fossil fuels that contribute to it.
“When we looked at the data, we found the biggest drivers of recent rate increases are things like the cost of fossil fuels and the price volatility associated with fossil fuels, and the cost of climate impacts — like wildfires in California.
