Seema Shah, chief global strategist at Principal Asset Management, analyzes the labor market and discusses the risks of a recession on “Making Money.”
High inflation may finally be starting to subside, but rising electricity prices are Financial pressures It affects millions of households across the United States.
The Labor Department said on Wednesday that electricity prices rose 0.1% in July from the previous month and 4.9% compared to the same period last year, significantly faster than the 2.9% increase in headline inflation recorded last month.
Nationwide, the average household electricity bill rose about 22% between 2018 and 2023, according to a recent report from S&P Global.
The problem may soon get worse.
July inflation breakdown: Where are prices still rising fastest?
“Prices are going to continue to rise at an increasingly faster pace,” Paul Cicio, president of the Electric Transmission Competition Coalition, told FOX Business.
High-voltage transmission lines run along a power grid in Pembroke Pines, Florida, on May 16, 2024. (Photo: Joe Raedl/Getty Images/Getty Images)
Transmission costs are the main driver of rising electricity prices, Mr. Cicio said, because Federal Energy Regulatory Commission rules allow companies to avoid competitive bidding to build “tens of billions of dollars” of large-scale transmission lines each year, lowering costs for consumers.
A transmission line is a special cable or other line that conducts electromagnetic waves.
Sicio estimates that competitively bid projects, which have legally binding cost caps and other accountability measures, would reduce costs by 25% to 30%.
“The high costs we are experiencing are due to monopolies. “Utilities can build transmission lines without bidding,” he said.
As the US works to decarbonize its economy and transition from fossil fuels to renewable energy sources like wind and solar, utilities are spending more on transmission. But spending more on transmission means higher electricity bills.
Inflation rises to less-than-expected 2.9% in July
“Higher transmission costs have already had an impact and will continue to do so,” Cicio said. “The construction of transmission lines has made electricity prices higher, but there has been no competition.”
People cool off and play in the hot weather with water sprayed from a fire hydrant in the Washington Heights neighborhood of New York City on July 16, 2024. (Photo: Adam Gray/Getty Images/Getty Images)
Rising summer temperatures and Extreme heat Americans are being forced to spend more money than ever before to keep their homes cool, according to a recent study released by the National Association of Energy Assistance Directors and the Energy Poverty and Climate Center.
In fact, home cooling costs are expected to rise 8% nationwide this summer to an average of $719, up from $661 for the same period in 2023. The report also showed that about 24% of households reported missing at least one energy bill in the past year.
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High inflation Severe financial pressures Most American households face high costs for everyday necessities like food and rent, and rising prices are especially devastating for lower-income Americans, who tend to spend more of their already tight paychecks on essentials and therefore have less flexibility to save.
