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.
Electricity
prices are forecast to rise slightly this summer. But any increase is
noteworthy because natural gas, which is used to produce nearly a third
of the country's power, is 43 percent cheaper than a year ago. A
long-term downward trend in power prices could be starting to reverse,
analysts say.
"It's caused us to scratch our heads," says Tyler Hodge, an
analyst at the Energy Department who studies electricity prices.
The
recent heat wave that gripped much of the country increased demand for
power as families cranked up their air conditioners. And that may boost
some June utility bills. But the nationwide rise in electricity prices
is attributable to other factors, analysts say:
-
In many states, retail electricity rates are set by regulators every
few years. As a result, lower power costs haven't yet made their way to
customers.
- Utilities often lock in their
costs for natural gas and other fuels years in advance. That helps
protect customers when fuel prices spike, but it prevents customers from
reaping the benefits of a price drop.
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