Americans who still rely on power plants for electricity have had to deal with some pretty serious sticker shock.
U.S. electricity prices rose an average of 14.3% in 2022—more than double the already soaring general inflation rate of 6.5%.
But if you're one of Pennsylvania Light & Power's (PPL) 2.5 million customers, that 14.3% increase may sound like peanuts.
At the tail end of 2021, PPL increased its electric rate by 26% in a single month...
... Followed by another even larger 38% rate hike in June...
... And then yet another 18% increase in December.
All told, PPL customers have seen their rates more than double in just over a year.
And that doesn't include PPL's $16.10 monthly service fee or the additional 4.667 cents per kilowatt-hour (kWh) surcharge that gets tacked on to the basic rate.
Soaring natural gas prices
In some respects, rising electricity prices aren't unique. After all, prices, in general, have been skyrocketing over the past year and a half.
But energy has been subjected to some unique and long-term inflationary pressure of its own.
Utility companies generate around 40% of their power by burning natural gas. So, when global shortages caused natural gas prices to start surging last year, electricity rates quickly followed
suit.
In fact, PPL's first two enormous rate hikes occurred immediately after sudden spikes in the price of natural gas.
To make matters worse, because of the war in Ukraine, the U.S. has banned natural gas imports
from Russia, which happens to be one of the world’s biggest suppliers.
Only the beginning
Utility companies are also about to embark on a necessary but very expensive spending spree.
Some of the money will go toward replacing aging infrastructure which, as things stand, is
causing more frequent and longer power outages.
The rest will go toward meeting state and federal mandates on carbon emissions.
All told, American power companies will be spending hundreds of billions of dollars over the
next couple of years -- substantially more than they've spent in over two decades.
Net metering
But it gets even better for solar-equipped homes and businesses in the Keystone State.
You see, PA utilities are required to pay full retail net metering.
That means they have to compensate you for any excess solar energy your solar system produces during peak sun hours at the very same rate they charge.
If you wind up generating more solar power than you need over the course of a year, your solar panels will even make you some money.
Every May, PPL tabulates how much surplus energy your system produced over the last 12 months versus how much power you had to draw from the grid when there was little or no sun.
If it turns out that you sent PPL more solar energy during peak sun hours than you drew from them the rest of the time, they'll send you a check for the balance.
Locking in a low electric rate with solar
The upshot is that a lot of Americans are facing a choice.
Pay increasingly higher monthly bills for years to come so their utility company can generate environmentally friendly power without increasingly frequent and severe power outages.
Or lower their energy costs by generating their own clean and renewable solar power which, with the addition of a battery, will power your home even when the grid goes down.