Americans might finally get some much-needed relief regarding home utility bills.
The triple threat of the pandemic, Russia-Ukraine war, and intense heat waves has Americans paying an average of 25% more for power.
Natural gas and coal are finally starting to slide in price. Together, the two resources account for 60% of US power production.
Power producers’ natural gas and coal costs were down 54% year-over-year in July, according to Goldman Sachs (GS). This would normally mean lower prices were on the way for consumers, but higher labor and interest expenses have offset the decreases in costs, keeping rates propped up.
National electricity rates did decline earlier in the year. The intense heat wave then disrupted this across the Southwest. The trend then reversed, with natural gas prices in June ending up 6.3% year-over-year.
If the decrease in gas and coal prices holds steady, the shift toward declining utility bills might finally stick.
Depending on where you live, a decline in gas and coal prices is typically reflected in consumer bills after about six to nine months. But this depends on many factors, including how your state regulates utility providers. For example, New Jersey allows providers to hedge costs as far as three years in advance, leading to less volatility than other states.
The country’s continued push toward renewable energy could also provide relief to the power grid. Solar-power production is expected to be 23% higher this summer than last year. For now, it will probably still pay to keep an eye on the AC and a box fan handy. But hopefully, the days of shockingly high electricity bills are nearing an end.
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