U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585
FOR IMMEDIATE RELEASE
January 23, 1998
Electricity Prices Down Third Year in a Row
The average retail price of electricity declined in 1996 for the third year in a row, and has remained stable for the first nine months of 1997. Moreover, the average residential price declined slightly in 1996, the first drop for this consumer class since the Energy Information Administration (EIA) began collecting these data in 1984.
According to Electricity Sales and Revenue 1996 released last week by EIA, overall average prices of electricity were down nearly 0.5 percent nationwide between the end of 1995 and 1996, and industrial prices were down more than 1 percent. Residential prices fell considerably in California, dropping by 2.4 percent during 1996.
Reasons for lower prices may include:
- Lower prices for fuel used to generate electricity - The price of coal, the major fuel used to generate electricity, dropped by more than 7 percent between 1993 and 1996. Also, lower-cost hydropower increased its share of total utility net generation from 9 percent in 1993 to nearly 11 percent in 1996, displacing more expensive generating capacity.
- Lower labor costs - Restructuring strategies such as downsizing and mergers have resulted in reduced labor costs at some electric utilities, as reported in Financial Statistics of Major U.S. Investor-Owned Electric Utilities 1996, released in December 1997.
- Lower interest rates and investments - Interest rates on borrowed money for major equipment purchases were stable in 1996 and some utilities postponed major plant acquisitions because of uncertainty regarding their customer base, also discussed in Financial Statistics.
Other highlights from Electric Sales and Revenue 1996:
- Declines in prices (average revenue per kilowatthour) for cooperative and Federal electric utilities, together accounting for 10 percent of electricity sales in 1996, were much larger than those at investor-owned and publicly owned utilities, which accounted for 90 percent of sales in 1996.
- Detailed data are included on electric utilities and State-level electricity sales to residential, commercial, and industrial consumers.
- Fourteen power marketers participated in four individual State "retail wheeling" pilot programs during 1996.
The report is available electronically on EIA's Internet Web Site (http://www.eia.doe.gov). The direct address is http://tonto.eia.doe.gov/FTPROOT/electricity/058996.pdf. Copies of the printed report are available from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center, 202/586-8800.
| The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization. |
EIA Program Contact: Linda Bromley, 202/426-1164
EIA Press Contact: Thomas Welch, 202/586-1178
EIA-98-04
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