Summer Power Prices Heat Up
- Jun 18, 2020
Despite dramatic declines in consumption by the commercial property sector, the direction of energy prices will vary widely by region this summer, according to the latest estimates by the U.S. Energy Information Administration.
In six of nine regions, average aggregate prices are on pace to rise compared to 2019 pricing, the agency found in its report released on June 6.
In another noteworthy finding, the agency projects that the fastest-growing source of electricity generation will be renewables, which will increase their share of generation from 17 percent in 2019 to 23 percent in 2021 on the strength of expanded wind and solar capacity, the agency reported.
Here’s the breakdown of average electricity prices for commercial customers by region and by projected increases or decreases:
New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut): In this section of the Northeast, electricity prices will slip notably from last summer. Average costs for the commercial sector will decline from 15.87 cents per kilowatt-hour in July 2019 to 15.47 cents this July. August offers a similar prospect, as prices tick downward year-over-year from 16.03 to 15.62 cents.
Middle Atlantic (New York, New Jersey, Pennsylvania): These three states encompass such major metros as Philadelphia, Pittsburgh and New York City, and electricity prices are on track to slide for the second half of the year. Average commercial rates will fall from 12.71 cents per kilowatt-hour in June 2019 to 12.09 cents this year. August projections call for an even larger drop—to 12.09 from 12.95 cents last year. And for the fourth quarter, the aggregate price per kilowatt-hour will decline from 11.97 to 11.32 cents, according to EIA.
East North Central 2020 (Wisconsin, Illinois, Michigan, Indiana, Ohio): Commercial customers in the part of the Midwest that includes Milwaukee, Chicago, Detroit, Indianapolis, Cincinnati and Columbus are likely to find the smallest degree of price changes compared to last year. For example, the average price of 10.10 cents per kilowatt-hour is nearly identical to July 2019’s 10.12 cents, and September’s 10.09-cent projection is a wash with 10.08 cents for the same month last year.
A mild uptick may be ahead in the fourth quarter; the Energy Information Administration is projecting an increase to 10.14 cents per kilowatt-hour from 10.05 cents in the fourth quarter of 2019.
In the East, Prices Head North
South Atlantic (Delaware, Maryland, Virginia, West Virginia, Washington, D.C., North Carolina, South Carolina, Georgia, Florida): In these eight states and the District of Columbia, electricity prices will move up substantially this summer compared to 2019. In June, the average price will rise year-over-year from 9.33 cents per kilowatt-hour in 2019 to 10.20 cents this year. Increases for July and August will be similar. A moderate change of direction will follow for the rest of the year, as average prices will decrease to 9.22 cents per kilowatt-hour in September from 9.35 cents last year. The estimate for the fourth quarter is nearly identical to 2019.
East South Central 2020 (Kentucky, Tennessee, Mississippi, Alabama): In many other regions, electricity prices vary considerably throughout the summer. The good news for commercial customers in these four states is that electricity prices should remain virtually unchanged for the next few months: 11.09 cents per kilowatt-hour in June and July, followed by 11.10 cents in August, before a mild increase to 11.24 cents in September. That said, the projections reflect an uptick from last year. The average regional price in July 2019 was 10.74 cents per kilowatt-hour, noticeably lower than this year’s estimate of 11.09 cents.
Pacific (Washington, Oregon, California): The three West Coast states will demonstrate the nation’s sharpest average electricity price increases this year. In July, the price will jump from 11.12 cents to 16.11 cents per kilowatt-hour, a 37 percent jump. That pattern will continue through September, and then reverse in the fourth quarter, when average prices per kilowatt-hour will drop year-over-year from 14.44 cents to 14.17 cents.
West South Central (Texas, Oklahoma, Arkansas, Louisiana): Big increases are also in store for this region. Average prices in June will jump from 5.32 cents per kilowatt-hour in 2019 to 7.84 cents this year, according to the Energy Information Administration. An even sharper increase is expected for the tail end of the summer, as average prices in September will increase from 5.75 cents per kilowatt-hour to 8.47 cents. Yet by the fourth quarter, that trend should reverse itself, as price changes level off from 8.06 cents per kilowatt-hour in 2019 to 8.03 for this year.
Mountain (Montana, Utah, Nevada, Colorado, Idaho, Arizona, New Mexico, Wyoming): Robust increases also appear to be in store on average for these eight western states. Prices last July averaged 6.77 cents per kilowatt-hour; this July, average prices for commercial customers will reach 10.06 cents. That pattern will continue through September, but the fourth quarter will show prices very similar to 2019—9.21 cents per kilowatt-hour, just a slight year-over-year increase over 9.18 cents last year.