The latest inflation data once again revealed that electricity price inflation is driving general price increases and is outpacing other energy commodities. It also prompted one association to call for more competitive bidding for the construction of electrical transmission lines.
Wednesday’s Bureau of Labor Statistics report says that on an annual basis, electricity price inflation rose by 3.9% or 56% higher than the CPI (2.5%) and 86% higher than food at (2.1%) respectively. Electricity prices continue to outpace other energy commodities, even as the price of natural gas and other generation are at near record lows that depress electricity generation costs. Electricity price inflation has exceeded the CPI in 20 of the previous 27 inflation reports, including 14 straight months between May 2022 and June 2023.
“In this election, we urge both candidates to focus on the real reason that electricity prices continue to outpace overall inflation, expensive transmission project costs that are not competitively bid,” said Paul Cicio, Chair of the Electricity Transmission Competition Coalition.
“Both candidates have promised to lower electricity prices, and they can do it by having FERC endorse electricity transmission competition. As Vice President Harris said, “more competition means lower costs for families.” Former President Trump has pledged to slash energy costs – endorsing free market competition, which would accomplish this goal. The fix is simple – competitive bidding of new transmission lines. It’s time for FERC to fulfill its mandate and deliver just and affordable rates by embracing electricity transmission competition.”
His organization stated that competitively bid projects routinely reduce costs by 25-30%, while monopoly utilities, which do not have any incentive to reduce costs raise rates and stick consumers with higher bills. Competitive bidding of projects can provide legally binding cost caps and the accountability measures that consumers need to avoid facing unfair and unnecessary higher electricity costs.