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usatoday.com
Electricity costs near 20-year highs
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — U.S. air conditioning bills might bulge this summer as electricity prices are projected to rise to their highest level in at least two decades.
An especially hot season likely would result in even bigger price increases. That could sap spending in the broad economy and produce a ripple effect in hiring as consumers and business owners try to offset the gains. Such fallout would be bad timing for a shaky economy that is showing signs of stabilizing.
Federal Reserve chairman Alan Greenspan predicted tight supplies of natural gas and high prices for a prolonged period Tuesday, largely because the U.S. market is unable to draw on world gas supplies easily.
"We are not apt to return to earlier periods of relative abundance and low prices anytime soon," Greenspan said in testimony at a congressional hearing. He noted that the markets are anticipating natural gas prices of more than $6 per one million British thermal units (Btu) well into next year. (Related story: Greenspan testifies before House Energy and Commerce Committee)
Assuming "normal" weather conditions, retail electricity prices on average nationwide will rise approximately 4% to top 9 cents per kilowatt hour in July, August and September, the Energy Department's Energy Information Administration predicted in a report released Friday. That would top prices for every summer since at least 1983, when the EIA began tracking electricity prices.
Although there will likely be big differences among regions, the price gain would bring the average household air conditioning bill to more than $150 this year, up about $5 from 2002. That's based on how much electricity households used in 1997, the most recent statistics, and doesn't include other electricity costs, such as appliance use.
Above-average temperatures, which have been seen in some parts of the country already, could lead to significantly higher gains.
The expected price increase is partly attributed to elevated natural gas prices, which have climbed as inventories have fallen to 29% below the five-year average. Natural gas is the third-biggest source of electricity generation after coal and nuclear power.
More than half of U.S. households are heated with natural gas, and supplies were sapped this winter as temperatures plunged. Inventories are also falling as production |
