According to a USA TODAY analysis, electricity rates across the country have skyrocketed during the last five years. The average household paid $1,419 for electricity in 2010 — the fifth yearly increase in a row. Electricity costs now consume a greater portion of Americans’ after- tax income, the most since 1996.
Government policy is the major reason electricity costs are increasing faster than the rate of inflation. The U.S. EPA has waged war on conventional forms of electricity generation and consumers are paying the price. Approximately 60 percent of the electricity generated in the country comes from coal-fired power plants, many of which are being retired due to onerous new EPA regulations. Consumers Energy reported earlier this month that it was ending its plan to build a new coal plant near Bay City and will retire seven other plants around the state in the coming years.
None of this should come as a surprise to consumers. Indeed, President Barack Obama publicly stated that his energy policy would cause electricity prices to “skyrocket.” State government policy is also to blame. Lawmakers in Michigan have pushed electricity rates higher by decreasing competition in electric markets and mandating that 10 percent of the power produced in the state by 2015 come from expensive alternative energy sources.
Affordable energy is absolutely critical if our state and nation hope to remain competitive in the global economy. Some factors affecting the cost of generating electricity, such as increased fuel costs, may be beyond our ability to control. But much of what is driving energy prices higher is due to misguided policies from our own government. Michigan lawmakers could help reverse the trend of higher electric bills by passing legislation that restores competition in energy markets and repeals the 10 percent renewable portfolio standard. Absent a change in direction of state and federal energy policy, Americans can expect their electricity bills to continue increasing and gobbling up an ever larger share of their income.