Most consumers tend to think that there are some economic constants, and that prices for certain items generally remain the same. But the global economy is is a highly dynamic organism, and it should be remembered that prices for many regular consumer items change all the time. When we look ahead to 2015, one of the consumer items that will probably fall into this category can be found in your utility bills — as the price of electricity should see some increases in the year ahead. These changes will not be spread evenly throughout the country but the broader trends for higher prices are clear.
Average Costs This Winter
Unfortunately, we have already started to see some of these trends in utilities start to take shape. In recent years, large numbers of power plants that use coal and oil and the basis for their energy outputs have been closed. These trends have been particularly apparent in the Northeast — but all across the country we have seen a widespread shift toward the use of natural gas. This has left many utility companies unprepared for the changes, and the result of the declining supply has been higher prices.
In New England alone, energy prices will be roughly 38% higher than they were in the winter of 2014. This might be surprising to some, given the fact that there is a large number of natural gas producers in nearby Pennsylvania. But the problem is that there is not enough pipeline infrastructure to cheaply transport the natural gas even at that small distance. The result is that energy supplies have diminished while consumer demand has remained constant. This is a recipe for higher energy prices overall.
Expect Higher Prices Throughout 2015
But these changes in price will not only be present during the winter. It is true there will be some consumer relief during the Spring months, which are generally marked by much lower energy consumption. But once the Summer cooling season rolls around again, we can expect another hike in prices.
Looking at specific examples, the California Pacific Gas & Electric Co. has announced plans to increase its customer surcharge by 6% in anticipation of the higher transportation costs that will be required to supply natural gas. This comes after the 4% increase that was already implemented in October 2014, so on a yearly basis California energy consumers will be seeing price increases of at least 10%. On the bright side, utility prices at this company are still roughly $30 below the national average, which currently comes in at $118.
These are some factors that consumers should keep in mind when turning on the thermostat for the remainder of this year. On the whole, it might be a better to put on a sweater this winter, rather than to turn up the heater because this year your per unit energy bills will almost certainly be higher than they were last year. Once the pipeline infrastructure is rebuilt to transport natural gas products greater distances, these prices will start to drop. But this is unlikely for the remainder of this year, so keep this in mind before you set your thermostat this winter.