Frankly, Scarlett, Retail Electricity Rates are Rising at Fastest Rate in Years

March 1, 2022
The nominal retail electricity price increase 4.3 percent to 13.72 cents per kWh in 2021. Adjusted for inflation, though, it's the lowest rate since 2006.

Sticker shock is not just for houses, automobiles and grocery items anymore. It's making history in the comfort of our homes, too.

The retail price of electricity paid by U.S. residential customer rose last year by the fastest rate in the previous 13 years, according to the federal Energy Information Administration.

The nominal retail electricity price increase 4.3 percent to 13.72 cents per kWh in 2021, the EIA reported. This increase is in line with last year’s inflation rate of 4.7 percent indicated by the U.S. Consumer Price Index.

The cost of natural gas, which supplies close to 40 percent of the U.S. power generation mix, drove much of the elevation in retail electricity rates. Driven downward in previous years due to high supplies and the COVID-19 pandemic economic downturn, natural gas rallied in 2021 to $4.98 per million British thermal units (Btus) delivered to power plants.

Inflation is a tricky indicator sometimes, though, considering that overall U.S. prices rose at low rates for decades. The real price of the all time high of nearly 14 cents per kWh rate last year was actually the lowest level since 2006 when adjusted for inflation, according to the EIA. That's the same math that informs you "Gone with the Wind" is still the all-time Box Office leader and not  "Avatar" or "Avengers: Endgame" (but it gave us a good excuse to use movie art).

The agency forecasts that retail electricity rates will continue to rise in 2022, although at a slower rate of 3.9 percent to 14.26 cents per kWh.