Hey Stephanie
I saw this today and thought of you. Your bill does seem too high though.
| Why your electricity bills are soaring | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By Betsy Schiffman, Forbes Are you shocked by how much you spend each month on electricity? When you open your utility bill, do you blow a fuse? If you feel that you're paying more for energy, you are. Today, according to the Alliance to Save Energy in Washington, D.C., the average American household spends about $1,400 each year on energy bills. But not all the blame should go to the power company. "Electricity prices haven't gone up nearly as much as other goods and services, such as health care, but even if the rates appear not to have moved much, every tiny jump in price rates can make the difference of hundreds of millions of dollars. Consumption has increased due to a mix of things -- we have more computers and appliances. But some of the increases in consumption have been offset by more efficient appliances," says Rodney Dunn, an electric power industry specialist at the Department of Energy's Energy Information Administration. Americans are paying more because we are using more. Even though most appliances these days are much more energy-efficient than in the past and people are more conscientious about turning off lights, an increase in the variety of electronic devices and the effects of deregulation means that the average monthly electricity bill is now almost $80, and in some places over $100. Ten years ago, few households had home computers, cell-phone chargers, DVD players or PlayStations.
Deregulation leaves patchwork of prices It's not just a matter of what devices you use, it's also where you live. Since the federal government opened the door to deregulation in 1992, some states pay more than others for electricity. In densely populated states like New York or Massachusetts, rates are generally higher. In 2002, the last year for which data exists, residents of New York paid an average of 13.58 cents per kilowatt-hour, the second highest in the nation. The highest in the nation is Hawaii, which paid 15.63 cents. In contrast, residents of Kentucky, which at 5.65 cents had the lowest price per kilowatt-hours, pay less than 50% of what New Yorkers pay. Electricity rates are supposed to reflect a balance of supply and demand. The Department of Energy projected that electricity delivery prices -- the cost for delivering the energy to the customer, not its generation -- will rise 4.7% in 2004, and demand, by comparison, is expected to rise only by 1.4%. However, according to the DOE, the actual cost of electricity in the United States is falling. After steady rises through the 1970s and mid-1980s, real electricity prices -- prices that do not include the effects of inflation -- are now in a state of decline. The 2002 real price of electricity was 7.2 cents per kilowatt-hour, and the Department of Energy is predicting that prices will drop to 6.6 cents by 2008, partly as a result of competitive forces. If prices really drop that much, electricity will be the cheapest it has been since the early 1980s -- although it remains to be seen whether deregulation will produce such a dramatic rate decline. Related news and commentary
Of course, there is a vast difference between what "average" users pay and what you pay. (Who are these average users anyway? Amish? Luddites?) The average American household, which usually includes two adults and two children, burns a lot of energy. Single people are less likely to stay at home and run air conditioners all day. They don't open and close the refrigerator as much, nor do they require three meals a day, blast the television continuously or constantly require clothes to be grass- or Chef Boyardee-stain free. More price increases to come Across the country, people are feeling the pinch. In Cincinnati, The Plain Dealer reports that customers of FirstEnergy (the utility often blamed for the August 2003 blackout) are paying 15 cents per kilowatt-hour -- comparable to Hawaii -- and paid an average of $109.24 in March, according to the report. In Maryland, a four-year cap was placed in 2000 on electricity rates as a way to ease the shock of deregulation, but that cap is set to expire July 1 when customers can expect to see a 15% increase from Maryland and District of Columbia utility Pepco, a subsidiary of Pepco Holdings. Similarly, in New York City, Consolidated Edison is proposing a 6.7% increase to take effect in April 2005, after the company's current rate agreement expires. "If you look across the country, the effect of deregulation has ranged from nothing to unmitigated disaster," says Mark Cooper, director of research at the Washington, D.C.-based consumer advocacy group Consumer Federation of America. "The free market has not produced any savings (for Americans), and market forces in the electricity industry are weak to nonexistent." Although deregulation has proven to be something of an expensive economic experiment (especially for former California Gov. Gray Davis), the long-term effects have yet to be seen, and in the meantime, many Americans in deregulated markets can expect to see bigger electricity bills. The average American household already spends $1,400 each year on energy bills, so any increase is probably unwelcome. If that bill even rises another 5%, that's an additional $70 per year. In the case of Maryland residents who may see their bills rise 15% or more, their annual energy costs could increase by more than $200. Cutting usage saves a bundle Still, when costs rise, there's no better impetus to start cutting usage. "Any time the price of energy increases there is more interest in conserving it and using it more efficiently," says Kateri Callahan, president of the Alliance to Save Energy. "You especially see that with gasoline -- when it no longer costs $20 to fill a tank, and it costs $50, people take notice." Callahan advises that home owners interested in cutting electricity costs (and who wouldn't want that?) should change the filter of the air conditioner, which she says can improve the air conditioner's efficiency. Alternatively, if you're due for a new air conditioner, a new energy-efficient conditioner can cut the energy bill by 22%. But it's not just a matter of turning devices off. Idle electronics -- such as the television or computer printer that isn't "on," but is plugged in -- is using energy to keep the remote control working or the display lit. Those devices cost Americans more than $3 billion annually, and use up about 5% of our domestic energy, according to the Lawrence Berkeley National Laboratory. Put another way, of the $1,400 a year spent on energy, about $70 of that is for idle electronics. To save money, consider unplugging the TV or computer printer when not in use. To gain a better idea of what the biggest energy suckers in the house are, we estimated the daily costs of a range of appliances based on the assumption that the home owner is paying a rate of 8 cents per kilowatt-hour (the residential average was 8.1 cents in 2002) and the costs are rounded to the nearest cent.
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http://moneycentral.msn.com/content/SavingandDebt/P87298.asp?GT1=4188