The United States is seeing its largest spending increase in years for utility companies.
Customers will pay more for electricity due to aging power grids, increasing electric vehicle use and gradual transition towards renewable energy dependence.
Let’s look at what’s happening and what you can anticipate.
RAPIDLY RISING ELECTRICITY CHARGES
Between February 2021-February 2022, there was a nearly 4 percent increase in residential electricity rates. This is an 8% increase over the previous year, the largest hike in many decades.
This is likely due to inflation ( lower gasoline supply causing higher gas prices). But, the chaos in supply chains makes it nearly impossible to maintain, repair and upgrade existing energy infrastructure without additional funding.
These spikes in electricity rates will only continue. Upgrades will require money from somewhere. It’s almost all going to come from customers’ monthly energy bills.
Climate change is another reason for rising monthly energy costs. Both households and businesses have to use more energy to heat and cool due to extreme temperatures. While utility companies raise prices, many households and businesses use more energy which causes their bills to go up.
UTILITY COMPANIES MAKE UPGRADES
In the next few years, utility companies across the country will spend hundreds of billions of money on infrastructure upgrades and repairs. These costs are mostly for repairs, maintenance, and upgrades that will make it easier to transmit electricity more efficiently. Climate change is another reason.
Utility companies recognize the need to upgrade their equipment to withstand natural disasters.
Think about the Texas winter storm that knocked out power in many areas for several days last year. With the increasing prevalence of natural disasters, like States like Texas and California are investing in clean energy to provide power for their communities. Other states are not far behind.
It will be its customers, however, who will pay the bill for infrastructure upgrades in their states. The money will come out of their high monthly energy bills.
RENEWABLE ENERGY PRICES
For several years, the price of solar panels and wind turbines has been falling — a significant benefit to those who want to shift to clean energy or rely on it more.
This has been due to supply chain issues. Analysts believe that the price of energy from renewable sources will decrease, further decreasing our dependence on oil, coal, and gas as primary energy sources.
Other options for reducing energy consumption include investing in electric vehicles to decrease consumer dependence on gasoline. However, there will be higher upfront costs for building new solar and wind installations, upgrading power lines or investing in batteries to backup power, as well as purchasing EVs.
People are looking for ways to decrease their dependence on the grid and their impact on the environment. You can do this by driving an electric vehicle and using solar energy to reduce your dependence on the grid.