Public Policy & Regulatory Decisions Are Driving Up Electricity Rates?

Electricity rates now depend more on public policy and regulatory decisions than on actual costs.

Based on a newly released report from Oliver Wyman, a leading global management consulting firm, “There is a growing need to increase electricity prices. These rate increases are largely being driven by environmental, regulatory, and security requirements.” And they are adding to “financial strain at the worst possible moment.”

The report, designed to help utility companies deal with customer wrath, states that “the increases have been the most significant in the residential segment”—where they grew more quickly than other sectors. Despite declining pricing on some fuels, such as natural gas, electricity rates have risen 2.7% per year with some regions experiencing average price increases of 5.1% annually. In contrast, the consumer price index—excluding food and energy—rose by 1.7%.