Electricity remains a good value
Electricity has fueled countless technological advances and consumers use it, either directly or indirectly, at almost all times. However, electricity is so abundant and affordable that it’s easy to take for granted.
Recently, much has been made of the rising cost of electricity, now and in the future. While that is true, it’s important to understand that electricity remains an undeniable bargain, and one of life’s great conveniences.
Power continues to be a bargain, especially when compared to other consumer goods.
Consider the cost of a gallon of gas 30 years ago compared to today’s price. How about a pound of coffee or a loaf of bread. The cost of electricity is only slightly higher than it was 30 years ago. While this doesn’t take the sting out of rising costs, it does show that the cost of electricity has remained relatively flat, despite its increased use and value to our daily lives.
Whether you consider yourself a bargain hunter or not, you are – perhaps unknowingly – taking advantage of one of the best deals around every time you plug in an electrical device. Sure, you pay your power bill each month, but do you know what you’re really getting?
For every $1 you spend on electricity, here’s how long you’re able to operate common household electronics:
Refrigerator: 1 week
Ceiling fan: 30 days
Lamp: 6 months
Cell phone: 1.5 years
Air conditioner: 24 hours
40-inch LCD TV: 1 month
Sources: ENERGY STAR, U.S. Department of Energy, Natural Resource Defense Council, Manufacturers information.
Electricity continues to be a bargain, especially when compared to other consumer goods. As demand for energy rises and fuel prices increase, Great River Energy and its member cooperatives are committed to providing safe, reliable electricity and keeping your bills affordable.
Rising costs are an industry trend – and one that won’t be ending soon. However, compared to other goods, the increase in electricity prices has been relatively low.
Electricity remains affordable and a good value, but there are forces driving up the cost of power – and they don’t appear to be slowing down. One of the primary reasons the cost of electricity began to rise is simply that there are more people, and each of them using more electronic devices – and more power – than they did years ago. To keep up with this trend, electric utilities increased investments in electrical infrastructure which ultimately ends up on consumers’ bills.
At the most basic level, the price of electricity is based upon three components – generation, transmission and distribution costs. Within these three factors are a myriad of other variables that contribute to rising costs. Great River Energy anticipates its wholesale power costs will increase an average of 4 percent over each of the next three years. Approximately 60-70 percent of an average electric bill is made up of wholesale power costs.
What’s causing rising costs for Great River Energy?
• We’ve been in a building phase to replace aging infrastructure in order to maintain reliability.
• We’ve experienced a temporary decline in sales to our members, primarily due to the downturn in the economy, which means wholesale costs are spread among fewer units sold.
• The cost for the fuel (e.g. coal) needed to generate electricity has also been on the rise.
• Complying with new regulations and requirements set by the state and federal government adds costs that affect our rate. These regulations include a renewable energy standard and additional environmental controls for our power plants.
• We’ve experienced a reduction in revenue from sales to non-members, or other utilities. Because most of the consumers our member cooperatives serve are residential customers, they primarily use electricity in the mornings, as they prepare for their day, and in the evenings when they return home for dinner and other activities. In past years, Great River Energy sold the additional power it produced in the middle of the day or night to the wholesale market. This was a tremendous benefit that significantly off-set the fixed costs of our power plants and transmission facilities. In the current economic environment, there has been little need for surplus power in the market which means member cooperatives are now paying a larger share of the fixed costs of the power plants and transmission facilities.