This transmission tower is obviously mocking you. (Photo by Nayu Kim.)

The cost of producing electricity, led by the increased use of natural gas, is dropping dramatically. And, therefore, as one would expect, the price we pay is going up.

Wait. That’s not how it’s supposed to work.

From the Chicago Tribune:

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A plunge in the price of natural gas has made it cheaper for utilities to produce electricity. But the savings aren’t translating to lower rates for customers. Instead, U.S. electricity prices are going up. … A long-term downward trend in power prices could be starting to reverse, analysts say. …

The average U.S. residential electricity price is expected to be 12.4 cents per kilowatt hour for the June-to-August period, up 2.4 percent from the same time last year. For the full year, electricity prices are expected to rise 2 percent.

The article offers some possible reasons for the increase:

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  • Locked-in fuel prices, meaning that utilities aren’t yet seeing impacts of lower prices for natural gas
  • Electricity rates set by regulators that haven’t been adjusted
  • An increase in the cost of delivering electricity, which comprises nearly half of the total cost

Moral of the story being: You can never win, so send your electric company more money forever.