EIA: U.S. electricity prices to rise 4% in 2014

Dive Brief:

Retail power prices will increase an average of 4% in 2014, the biggest jump since 2008, and prices will be 13% above this year’s level by 2020, according to the U.S. Department of Energy’s Energy Information Administration (EIA).
Although the national average inflation-adjusted residential electricity price is nearly 30% below the 1984 price, it is now rising because of (1) the shuttering of coal plants, the biggest source of cheap power, (2) in response to the recession-driven demand drop, (3) low natural gas and wind energy prices, and (4) environmental regulations.
The estimated 13% increase in the U.S. electricity price by 2020 does not include the impacts of coming EPA pollution and emissions rules that are likely to force expensive plant retrofits and at least 68 plant closures across 20 states between 2014 and 2017.

Dive Insight:

The Obama administration, state governments, and the private sector are working to balance the need to cut emissions with needs for lower electricity prices and grid reliability.

Coal is still the workhorse of U.S. power, producing about 40% of the nation’s electricity and, because it is cheap and abundant, it keeps the electricity supply stable and the power price low, but its emissions are toxic.

Natural gas provides about 26% percent of U.S. electricity, its emissions are lower than coal, and new shale gas reserves have made it inexpensive, but a limit of pipelines and onsite storage make its delivery and supply constrained and its price is volatile and rising.

U.S. electricity prices spiked during this winter’s cold snap, sometimes by 1,000%, because of inadequate natural gas supplies, limited by delivery issues and by the competitive demand for gas for heating.

Coal-fired generation releases toxic chemicals, soot and smog-forming chemicals, and twice the carbon dioxide of natural gas which is why the need for EPA regulation under the Clean Air Act has been affirmed by the Supreme Court.

Expect the Obama administration EPA rules to be challenged in court and at voting booths in November.