Growth in Residential Electricity Prices Highest in 6 Years, but Expected to Slow in 2015
Source: U.S. Energy Information Administration, Electric Power Monthly and Short-Term Energy Outlook
Residential electricity customers in most areas of the country experienced large increases in retail electricity prices during 2014, with the average U.S. residential price increasing 3.1% over the previous year. The increase represents the highest annual growth rate since 2008. EIA forecasts that prices will increase during 2015, but at a slower pace than in 2014.
Residential electricity rate increases during 2014 ranged from 1.3% in the Pacific Coast states to 9.9% in New England. Retail electricity prices have risen for various reasons. Many electric utilities purchase their power from regional wholesale electricity markets, which, at a national level, experienced higher prices last year. Other reasons commonly cited for higher retail electricity prices are the increased investment in transmission and distribution infrastructure, rising requirements to generate electricity from renewable energy sources, and utility investment in demand-side efficiency.