Inflation is Coming Down…Except for Electricity
Americans are getting relief from inflation everywhere - except on their energy bills. The chart below from the Wall Street Journal caught my eye this weekend.
After a stagnant decade, power prices have steadily climbed as a result of elevated natural gas prices and the growing demand from AI and electrification which creates the need for more investment in our grid.
Many will blame the latter for the change, but this increase feels like paying a bill that’s long overdue.
We’ve needed to upgrade our power infrastructure for decades and doing so requires investment. That was always going to be the case regardless of cause. It’s easy to blame AI or renewables volatility, but the truth remains that under-investment into any infrastructure eventually catches up to you.
Like many, I’d like to see utilities rewarded for efficiency gains, not just building new lines. But, a combination of both is likely needed to keep bills from soaring.
Utilities should be rewarded for getting the most out of existing power plants and lines. The same can be said for customers who participate in demand response programs or put solar on their roofs.
This approach would ensure the fastest path to upgrading our infrastructure while ensuring the costs are spread across the system and not just bared by any one participant.
