Soaring Electricity Prices Likely to Get Worse


If you haven’t already made the switch to solar power, you’re undoubtedly noticing that the cost of electricity is skyrocketing.

Americans who still depend on utility companies for power are experiencing monthly bill increases of 20% or more. But, as bad as soaring electricity prices have already been, it looks like they’re about to get a whole lot worse.

Much of the rising costs we’ve already seen result from a natural gas supply crunch. 

Around 40% of the big power plants’ output comes from burning natural gas. So, when its price rises sharply, the monthly electric bills of those still tethered to a utility company to meet their energy needs quickly follow suit.

Domestic natural gas prices had already soared to the highest levels in years at the beginning of December, after record-setting levels were shipped overseas. But fears of an impending global shortage have recently caused the cost of natural gas to shoot up even higher, with prices now almost 50% higher than they were a year ago. 

Though utility companies have to get regulatory approval to raise their rates, allowing them recoup losses due to increased costs is standard operating procedure. The unfortunate result is that their customers got hit with the largest annual increase since 2008 last year, when the average per-kilowatt-hour cost of electricity rose 4.3% to 13.72 cents.

Since the new year, things have only gotten worse, with some Americans getting hit with the awful sticker shock of a monthly electric bill that’s twice as high as anything they’d previously seen. But, sadly, that may be peanuts compared to the price hikes likely on the horizon.

In response to the invasion of Ukraine, the Biden administration has banned the import of natural gas from Russia. Analysts expect that by itself to lead to higher natural gas prices, which in turn will cause electric bills to soar even further.

But the sanctions implemented on March 8 affect more than just natural gas. Russian oil and coal are also banned. And, since burning those fossil fuels accounts for over 20% of the electricity generated by the big power plants, the price hikes that are sure to follow will mean even higher monthly electric bills for those Americans still dependent on external sources for their power.

Of course, that doesn’t include homeowners and businesses who’ve already ditched their utility bills by installing solar panels to generate their own power. 

Even in 2020—before the price hikes we’ve already seen and those likely to come—Americans still tethered to a utility company for their energy needs were paying over $0.10 per kWh. Whereas the average cost of electricity produced by a rooftop solar system is only $0.06 to $0.08.

So, those who’ve already achieved energy independence by going solar aren’t just immune to the dreadful sticker shock of rapidly rising monthly electrical bills. Both the price hikes in power-plant generated electricity we’ve already seen as well as those yet to come just make their already smart investment in solar energy that much smarter.

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