Key Insights on Electricity Costs

Rising electricity costs are straining American households, yet clean energy is not to blame. Instead, the real culprits are fossil gas price spikes, increased expenses to maintain and rebuild aging grid infrastructure, and a utility business model incentivizing large capital investments that burden customers for decades. 

A new report by the think tank Energy Innovation highlights the need for a shift toward sustainable and efficient energy solutions. Since 2010, average U.S. electricity bills have risen by 24%, with a notable 13% increase in 2022 alone. Additionally, nearly a third of U.S. households have cut back on essential expenses to pay for utilities in the past two years, according to a LendingTree survey.  

Opponents of clean energy claim that subsidies have increased energy prices, suggesting a return to fossil fuels. However, the actual drivers of climbing electricity rates are spikes in fossil gas prices, rising costs to maintain and rebuild aging grid infrastructure, and a utility business model that incentivizes large capital investments, which customers pay off over decades. 

The Energy Innovation Report identifies several key factors behind rising electricity prices: 

• Fossil Fuel Costs: 

• Volatile natural gas prices significantly impact electricity prices. 

• High reliance on fossil fuels exposes consumers to market fluctuations and price spikes. 

• Climate Impacts: 

• Increasing climate-related events, such as wildfires and extreme weather, necessitate costly infrastructure repairs and upgrades. 

• Utilities pass these costs on to consumers, contributing to rising electricity rates. 

• Utility Business Models: 

• The "cost-of-service" model incentivizes capital investments over operational efficiency. 

• Utilities earn returns on capital expenditures like new power plants, often preferring fossil fuel investments, which can be more expensive and less efficient compared to renewables. 

Access the complete report here: https://www.ourenergypolicy.org/resources/clean-energy-isnt-driving-power-price-spikes/