Natural Gas and Electricity Prices Increase Sharply in January

February 20, 2014

According to data released by the Bureau of Labor Statistics (BLS), consumer prices increased in January slightly by 0.1% on a seasonally adjusted month-over-month basis. Over the past twelve months, prices on expenditures made by urban consumers increased 1.6% before seasonal adjustments.

The month-over-month increase in the all items index was driven by a 0.6% increase in the energy price index. The natural gas index, a component of the energy price index, experienced the largest month-over-month increase of 3.6% on a seasonally adjusted basis. The electricity index also experienced a large increase of 1.8% on a seasonally adjusted month-over-month basis. Over the past twelve months, the natural gas index increased 4.9% and electricity index increased 4.4% before seasonal adjustments.

Utilities bills (natural gas and electric) are an important part of residential expenditures. A large increase in prices during an especially cold winter can impede expenditures on other goods. Of course, consumption expenditures on utility bills vary by state and the age of the housing stock. In general, older homes are less energy efficient than new construction.

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The Core CPI, which excludes more volatile food and energy prices, rose by 0.1% month-over-month. Over the past twelve months Core CPI increased by 1.6%.

The shelter index rose 0.3% month-over-month in January after increasing 0.2% month-over-month in December.  Over the past twelve months, the shelter index increased 2.6% before seasonal adjustments.

Because shelter costs represent a large share of the average consumer’s expenditure’s, a 0.3% month-over-month increase is worth exploring further. Although the increase in the shelter index partly reflects increases in rental prices, the BLS measure does not isolate the change in rental prices from the changes in the overall price index. NAHB constructs a real rent price index to isolate the change in rental prices. The NAHB constructed measure indicates whether inflation in rents is faster or slower than general inflation and provides some insight into the supply and demand conditions for rental housing, after controlling for overall inflation.

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The real rent index has increased for twelve consecutive months. The real rent index increased in January by 0.1% month-over-month and 1.2% over the past year.


Average Monthly Electric Bill by State

December 2, 2013

The average monthly electric bill for residential properties in Hawaii was $203.15, the highest in the nation for 2012, according to recently released data from the U.S. Energy Information Administration (EIA). The average residential electric bill, by contrast, in New Mexico was $74.62, the lowest in the nation. In the contiguous United States, the South Atlantic region had the highest average monthly electric bill at $122.71, while the Pacific region (California, Oregon, and Washington) had the lowest.

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The EIA is the government agency responsible for the collection and dissemination of energy information. EIA conducts an annual survey of the electric power industry. Results from the survey are used to estimate the average residential monthly electric bill by state.

The four categories of electric industry consumers tracked by the EIA are residential, commercial, industrial, and transportation. Residential consumers account for the largest share of electric industry sales at 37.2% with commercial consumers a close second at 35.9%. Industrial consumers account for 26.7% of sales.

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In addition to being the largest category of consumers, residential consumers generally pay the highest prices. The average retail price paid by U.S. residential consumers in 2012 was 11.88 cents/kWh. The average retail price paid by commercial consumers was 10.09 cents/kWh while industrial consumers paid 6.67 cents/kWh.

The EIA also provides estimates of average residential monthly consumption and price by state. The average residential monthly price is given cents per kilowatt hour. A direct link to the 2012 statistics is provided below.

2012 Average Monthly Bill – Residential Electric

In 2012, the state with highest average monthly consumption was Louisiana at 1,254 kilowatt hours. The state with the lowest average monthly consumption was Maine at 531 kilowatt hours. The New England region had the lowest average monthly consumption. According to the EIA, over 80% of the homes in the Northeast rely on heating oil for space heating instead of electricity.

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In 2012, the state with the highest average retail price was Hawaii at 37.34 cents/kWh. The state with the lowest average retail price was Louisiana at 8.37 cents/kWh.

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The electric bill is a large part of the residential energy expenditures. Understanding differences in electric consumption and price by state is useful for home builders as energy efficiency is becoming a more desired feature. However, homeowners do expect a reasonable period of payback. A recent NAHB study examining home buyer preferences found that nine out of ten buyers would pay a 2 percent to 3 percent premium for a home with energy-efficient features and permanently lower utility bills. Homeowners in states with higher electrical prices are more likely to be interested in residential power production, like solar.