The average price an American household paid for a kilowatt-hour of electricity went up significantly last year.
But the averagemonthly electric billrose only a little.
The reasons why are a little complicated.
That increase isn’t nothing.
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For some, the surprise from that data set comes in its relationship withinflation.
But for those who have watched the market for years, that relationship is no surprise.
“So it’s about what I would expect.”
Why are electricity rates rising faster than bills?
Although residential electric bills didn’t skyrocket last year, the actual price of electricity continues to rise.
The consumption of that electricity, however, is going the other direction.
Average monthly electricity consumption per residential customer dropped from 899 kWh in 2022 to 855 kWh in 2023.
But even those relationships are a chicken-and-egg issue.
Why did we use less energy last year than we did in 2022?
That’s up for debate.
But one of the biggest reasons, according to Gorski, ismore efficiency in our homes and buildings.
“Efficiency in houses keeps improving,” he said.
“You see huge differences,” Gorski said.
So it varies a lot by state."
States and regions even affect the efficiency that Gorski cited as the driver of decreasing demand.
And then, there’s the weather.
“Consumption is very weather-related,” Gorski said.
… Air conditioning is the main driver for consumption.
With winter coming, that means higher heating costs.
Average electric bill by state
Can renewable energy actually decrease electric bills?
At the macro level, the math is easy:Renewables are our cheapest form of energy.
Are they so much less expensive that they could actually send electricity bill prices heading in the other direction?
Some experts don’t think that’s too outlandish.
For many, the continued increase in adoption ofrooftop solarserves as a major hope for the future.
The technology isdropping in priceand becoming easier than ever to install on your home.
That has Lezcano and others bullish on its potential to shape the industry.
“That plus increased efficiency in residential homeswilldrop consumption at the residential level.”
On a broader and even more simple level, more access to renewables means more competition.
And that’s always a good thing for consumers.
“That variety increases competition.
Whether you’re fossil fuel or renewable, they both want your business.”
