Experts expect electricity prices to top 14¢ per kWh this summer!

Electricity prices are increasing as we get closer to summer. But why? According to the Energy Information Administration, the average retail electricity price for residential electric customers rose at the fastest rate since 2008, increasing 4.3% from 2020 to 13.72 cents per kilowatt-hour (kWh).

Here are a few reasons electricity prices are higher than in 2021:

1. Severe weather events in 2021, including the major winter storm that led to significant energy disruptions, also contributed to higher average electricity prices.
2. The banning of Griddy, which sold power at wholesale prices, removed a major incentive for retailers to keep their prices down to compete.
3. Effective September 1, 2021, utility distribution rates increased by 9.7% for Oncor and 16.5% for Centerpoint.
4. Prices are usually highest in the summer when electricity demand is high because more expensive generation sources are added to meet the increased demand.
5. Prices for most types of fuels rose significantly in 2021, including the cost of power generation fuels, especially natural gas.

The lower 8-10¢ rates you might have seen in 2021 no longer exist.

“We forecast that residential, retail electricity prices will continue to rise in 2022…the average nominal price will increase by 3.9% to 14.26 cents/kWh,” predicts the Energy Information Administration.

To avoid high electricity prices, you should lock in a low fixed rate and avoid contracts that end in May-August, as your next contract will be higher.