You'll pay less for power, but 25% more than pre-pandemic

Bureau of Labor Statistics graph via The Wall Street Journal

In a welcome about-face, Americans can look forward to lower electric bills in the coming months, reports Bob Henderson of The Wall Street Journal. "A slide in prices for natural gas and coal—which together fuel about 60% of U.S. power production—has only begun feeding through to ratepayers, according to some Wall Street analysts. Retail rates typically lag behind fuel costs by six to nine months, partly because utilities often protect against price swings by buying in advance, Goldman Sachs economist Spencer Hill found in a recent research note."

Cheaper fuels will reduce "average electricity prices by 3-4% from their peaks by fall, Hill's modeling suggests. . . . National electricity rates were already sliding early in the year but rebounded in June after a Southwestern heat wave," Henderson writes. Despite the decrease in prices, "Americans now pay an average of nearly 25% more for power than they did before the pandemic and Russia's invasion of Ukraine."

Drastic weather could change the predicted decrease. Henderson adds, "Temperatures typically peak in late July, and the outlook for August is in line with 10-year averages, said meteorologist Matt Rogers. The pattern means the worst of this summer's heat is likely over, though he still sees a possibility of roving hot spots and power price spikes in places such as Texas, the Southwest and the Pacific Northwest."

"The country's ongoing renewable energy build-out might weigh on electricity rates beyond Goldman's estimates. Solar-power production this summer will be 23% higher than last year, estimates the Energy Information Administration," Henderson reports. But even with the hoped decrease, some people will keep their thermostats up. Retired Air Force Lt. Col. Jeff Heller, of Canyon Lake, Texas, "keeps his upstairs thermostat set to 84 degrees in summer." He told Henderson, "If it drops by 20%, I might be inclined to drop it by another degree."