AP’s Account of Falling Electricity Prices Misleading

September 4, 2009

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Contrary to a popular Associated Press story, electricity prices are not trending downward as a whole, at least compared to prices before the typical summer price spike.

An AP story, “Demand for Electricity Sputters and Bills May Fall,” was widely circulated over the Labor Day weekend. The article noted how electricity prices were expected to decline for the rest of the year, stating “Consumers and businesses may finally be seeing some relief from rising utility bills, thanks to the biggest decline in U.S. electricity demand in decades.”

When compared to high-demand July and August prices ($0.112/kWh for the commercial sector), prices are indeed expected to decline over the remainder of the year, with September prices averaged $0.111/kWh, October at $0.107/kWh, November at $0.104/kWh and December at $0.103/kWh.

However, a comparison of those figures to prices from January through May, when commercial electricity prices ranged from $0.10/kWh to $0.102/kWh, shows that prices this Fall actually will be higher.

In fact, the October price will be 6.5 percent higher than the January price.

View complete stats from the Energy Information Administration here.

Despite the slight overall rise in prices, the utility industry is suffering from lower profits.

For instance, Ameren UE, a Midwest utility, is laying off 350 people, citing the sagging economy, reports the St. Louis Post-Dispatch.

In the Northeast, National Grid is holding hearings as it attempts to raise electricity rates by 11 percent, reports the Providence Journal.

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