As we prepare to ring in the New Year, many electricity consumers are left wondering what their electricity rates will look like in 2017.
Truth be told, there isn’t a quick, easy or short answer to this question. However, we don’t want to leave you in the dark! To try and help you better understand what you can expect when it comes to next year’s electricity rates, we’ve put together the information you need to know about the status of current rates and what you can expect to see on your electric bills in 2017.
Electricity Rates for 2016
Currently, the Energy Information Administration (EIA) has determined that the average cost of retail electricity for Americans will reach 12.03 for the month of December (and by the end of 2016). That being said, no matter the year, month or day, electricity rates will always differ between cities and states. Electricity rates also depend on the type of plan you sign up for (residential, commercial or industrial).
When it comes to energy deregulated states, electricity suppliers often make their rates and plans available online to keep customers informed. These rates are important because they give us baseline from which we can understand current rates within a particular state and city.
December 2016 Electricity Rates
If we take a look at the different plans and rates posted by electricity suppliers today, it helps to give us a better idea of what residential consumers would need to pay for electricity right now. Some of these current rates include:
Houston, Texas: rates fall between 8.7 cents and 13.9 cents per kWh
Dallas, Texas: rates range from 7.9 to 13.2 cents per kWh
Austin, Texas: 13.2 and 7.9 cents per kWh depending on the plan selected
Harrisburg, Pennsylvania: rates land between 6.89 to 8.89 cents per kWh
Philadelphia, Pennsylvania: 6.89 to 8.98 cents per kWh, depending on utility and plan selected
Pittsburgh, Pennsylvania: rates range from 6.89 cents to 8.24 cents per kWh
Columbus, Ohio: Depending on your utility rates range from 5.69 to 5.79 cents per kWh
Cincinnati, Ohio: electricity rates available from 5.89 and 5.99 cents per kWh
Boston, Massachusetts: rates available from 10.19 to 11.09 cents per kWh
Newark, New Jersey: 11.89 to 13.89 cents per kWh based on utility and available plan
Chicago, Illinois: 6.99 to 11.09 cents per kWh depending on plan and utility
Springfield, Illinois: rates from 6.79 to 7.09 cents per kWh
Comparing Rates from 2014 to 2016
It is sometimes helpful to look at the electricity rates of the past in order to understand current and future trends. For example, in 2015, rates were 3% lower between the months of June to August. Why? Well, the average temperatures of those months in 2015 were much lower than they were this year, which caused more people to use electricity via air conditioners and other cooling systems.
At the same time, the total sales of residential electricity were estimated to be 0.6% higher in 2015 compared to 2016. This is also in thanks to less electricity sold at the beginning of 2016 due to warmer winter temperatures compared to the previous year.
When it comes to the commercial sector, electricity sales have grown 0.3% in 2016. The industrial sector however has seen a 0.6% drop in sales compared to 2015 because of the economic slowdown.
Average Annual Electricity Rate by Sector
According to the EIA, average electricity rates for residential, commercial and industrial sectors within the United States have both increased and deceased over the course of several years. From 2014 to 2016, these rates include:
2014 (cents per kWh)
Residential Sector: 12.52
Commercial Sector: 10.74
Industrial Sector: 7.10
2015 (cents per kWh)
Residential Sector: 12.65
Commercial Sector: 10.64
Industrial Sector: 6.91
2016 (cents per kWh)
Residential Sector: 12.53
Commercial Sector: 10.34
Industrial Sector: 6.75
If you compare rates between each year, and then compare those rates with changes in climate and temperature, it becomes clear that the rates of electricity have a great deal to do with how hot or cold it gets in the summer and winter months.
Winter Transition from 2016 to 2017
The average winter season is defined during the months of October to March of the following year. Therefore, the current winter season started in October of 2016 and will end in March of 2017.
In the United States, approximately 39% of households depend on electricity. This average ranges from 15% in the Northeast to 63% in the South. Based on these percentages, the EIA estimates that consumers heating their homes using electricity will spend about 5% more on this winter. This translates to an average of $49 more for the season. The reason for this is because Americans have increased electricity consumption by 5%, in addition to the fact that compared to the winter of 2015/2016, electricity prices have increased by 1%.
The EIA also estimates that should this winter get very cold, consumers could see an increase as high as 9% from 2015/2016 winter season. This would increase electricity bills as much as $81 for the 2016/2017 season. While the rates would not rise towards the end of 2016 or beginning of 2017, they would have an impact towards mid to late 2017.
Rates in 2017
Now, to try and answer the big question: what will electricity rates look like in 2017? While we don’t know for certain, there are a few estimates and assumptions that we can explore.
In 2017, electricity sales will be 0.9% higher compared to 2016 (according to the EIA). The commercial sector is also expected to see an increase of 0.9% and industrial sales will finally see some growth of about 1.2%.
When it comes to residential rates, EIA estimates that they will increase by 3% for 2017. Estimated rates for each sector in 2017 are a little higher compared to 2016 and even 2015 and 2014. The estimated average electricity rates by sector include:
2017 (cents per kWh)
Residential Sector: 12.87
Commercial Sector: 10.58
Industrial Sector: 6.87
Much like 2016’s soaring summer temperatures, the reason why consumers are expected to see an increase in electricity rates over the course of 2017 has to do with the predicted winter. Much colder temperatures are expected early in the New Year, which will cause consumers to use more electricity for generating heat. This increase will then impact rates towards the summer months, causing the average annual rate to increase when compared to 2016.