electricity rates

Does higher electricity rates result in larger bills?

Obama’s announcement of carbon pollution regulation certainly caused a stir. Environmentalists hail the plan as a big deal for climate change.  Critics blasted it will drive up electricity rates. Both are important points. However, a business person needs to know how this will affect their bottom line.  In essence, does a higher electricity rate result in a larger bill?

The answer is no.

We would expect that states with the lower rates pay less in bills.  But according to data from the Energy Information Administration, that is not the case.  From the graph, we can see that a Washington state homeowner pays the same amount as a California homeowner. This is in spite of electricity rates in California being nearly double the rates in Washington.  In fact, residents of Alabama pay nearly twice more per month to run their homes, despite electricity rates being 30% lower than in California!

States with higher rates also invest in energy efficiency.  If anything, higher rates motivates homeowners buy insulation, seal windows, replace hot water heaters, etc.  This can increase the demand for construction jobs – a positive for the economy.

In summary: yes, the climate action plan will affect climate change.  It will most likely increase electricity rates.  But no, it may not result in a larger bill.

For more info: www.whitehouse.gov/sites/default/files/image/president27sclimateactionplan.pdf

via Does higher electricity rates result in larger bills?.

Jimmy Jia

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