By Mike W. Ray
Southwest Ledger
Oklahomans complaining about soaring electricity rates are supported by news that electricity price inflation is rising dramatically. In fact, it is outpacing the overall Consumer Price Index (CPI), according to a July report from the U.S. Bureau of Labor Statistics.
On an annualized basis, electricity price inflation increased 5.8%, more than double the 2.7% for the general price level. Monthly increases for electricity prices were more than triple the overall rate of inflation; electricity prices rose 1.0% in June, while the CPI measured a 0.3% increase.
The U.S. Energy Information Administration (EIA) reported electricity prices for American households increased by an average of 25% from 2020 to 2024, which exceeded the rate of inflation. From 2000 to 2022, U.S. electricity prices rose by an average of about 2.8% each year – but since 2022 they have risen by 13% annually, according to the EIA.
Between 2013 and 2023 electricity prices “closely tracked inflation,” but “we expect increases in electricity prices to outpace inflation through 2026,” the EIA reported in May.
One source contends it will get worse – much worse.
The “One Big Beautiful Bill” passed by Congress and signed by President Trump eliminates tax incentives for solar and wind projects throughout the U.S. Four states in particular rely almost entirely on the federal government for renewable energy development.
Consequently, Energy Innovation, a climate policy think tank that provides science-based research, predicts that energy costs will increase the most in Oklahoma, Kansas, Missouri and Kentucky.
Rates in Oklahoma are projected to soar by perhaps 60% to 350% by 2035, Energy Innovation reports. Kansas, Missouri and Kentucky are projected to experience rate hikes of at least 30%, 39%, and 48%, respectively, over the next decade.
Energy Innovation said electricity costs will increase the most in those four politically conservative states “because they have no state-led renewable programs.” As a result, “they will have to rely on more expensive forms of energy as wind and solar industries shrink and subsidies vanish.”
U.S. consumers spent an average of approximately $1,760 on electricity expenditures in 2023. Among fuel-related expenses, electricity costs were surpassed only by gasoline, which averaged nearly $2,450 in 2023, according to the most recent data available from the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey.
“Electricity demand in the United States is rising faster than it has in at least two decades,” The Atlantic magazine noted recently.
Details provided
on PSO, OG&E
customers’ bills
Public Service Co.’s rates have increased since Dec. 28, 2021, by approximately $32.88 per month for the average residential customer, Patrick Sullivan, manager of Sullivan Economic Consulting, testified in PSO’s application for preapproval of its purchase and cost recovery of the Green Country generating plant at Jenks.
And after taking into account the impact of the surcharge levied by PSO to recover its fuel and power purchases during Winter Storm Uri in February 2021, the average residential customer’s monthly electricity bill will have increased by almost $37/month, or $443 per year over the past three and a half years. Remember: that’s the increase, not the total bill.
According to PSO, a Tulsa-based utility that serves 580,700 customers in 232 cities and towns in eastern and southwest Oklahoma, the “average” annual usage of electricity among its residential customers totals 12,312 kilowatt hours (1,026 kWh per month) at an average cost of 12.73 cents per kilowatt hour.
One northwest OKC family of five paid a $411 Oklahoma Gas & Electric bill in July. A northwest OKC retired couple paid OG&E $1,020 for electricity usage in their 1,513 square-foot home in 2024. OG&E billed an Edmond couple with two school-age boys $2,028 for electricity consumption in their 1,945 square-foot home during the past 12 months.
Just last week Southwestern Power Co., like PSO a subsidiary of Ohio-based American Electric Power Co., asked Arkansas regulators to approve a 27% monthly increase in residential utility bills.
PJM prices rise 22%
PJM Interconnection recently closed its annual capacity auction with prices for wholesale electric capacity up 22% from 2024, another record-breaking year. As a result, monthly electric bills in PJM’s territory, which covers 67 million customers, could increase up to 5% next year, the grid operator said.
In one complaint to the Federal Energy Regulatory Commission (FERC), jointly filed with Illinois and New Jersey, Maryland’s Office of People’s Counsel pointed to PJM’s 2025-26 capacity auction in July 2024, which sent prices surging to $269.92 per megawatt-day, a staggering increase from $28.92/MW-day in the previous auction.
According to the complaint, overall auction costs increased from $2.2 billion to $14.7 billion in one year, producing an unjustified spike in expenses for customers. New Jersey residents faced a nearly 20% increase in their electricity bills on June 1.
PJM Interconnection territory spans 13 states from the Midwest to the East Coast – including all or parts of Delaware, Indiana, Illinois, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Washington, D.C.
Every year, PJM’s summer auction determines the cost of wholesale electricity for the following year. Though its territory doesn’t cover the while U.S., the energy industry looks at the PJM auction as a bellwether for electricity prices for the entire country.