Electricity rates in the US are increasingly becoming cheaper because of new efficiencies being developed, more niche energy and electric service companies coming into business and cheap energy sources like natural gas, coal, and nuclear being used to create electricity.
We owe electricity deregulation and the resulting competition to the low electricity prices we see in the US.
On the other side of the energy debate is the question of whether or not deregulation of retail electricity markets really does help in lowering price?
With energy commodities being used as a hedge and sometimes replacement for failed currency markets energy prices are impacted in a heavier way by hedge funds and energy traders. On top of the effects of energy trading simple supply and demand for electricity around the world has a bigger impact on why electricity prices are trending up than the idea that electricity deregulation is at fault. You also have to consider that their is a huge political surge to use more renewable energy sources that cost more than generation sources like natural gas and coal. Wind and solar continues to be pushed by political forces even though the cost dramatically increases the price of electricity.
Electric power is a hot political topic and very controversial because as energy prices go up food prices go up. With high food prices it causes economic panic and sends traders back into buying more oil and natural gas futures which drives prices even higher. At this time there is no correlation with oil and natural gas and so electric power prices remain much lower than gasoline prices because electric power does not rely upon oil but relies upon natural gas, hydro, biomass, and coal to produce the needed electricity power demand.
Rather than look to green energy such as solar and wind power additional cheaper ways are available to clean up the environment and lower electricity prices. Energy efficiency measures like implementing new distributed generation systems at the point of electricity consumption and updating and retrofitting the electric grid infrastructure can reduce US energy costs.
It is only a matter of time however until natural gas prices start heading back up and when this occurs people will not only be paying too high of a price at the pump but also for the electric power in their homes.
This electricity blog attempts to explain the real causes for rises in electricity prices, what positive or negative effects deregulation plays into electricity prices, and what nifty inventions and gadgets are available to create cheap off the grid electric power.
