As utility providers in Pennsylvania and other states in the eastern U.S. prepare to raise rates because of increasing demand and a shrinking supply of traditional power generation, millions of residents are expecting higher energy bills starting this month.
What's causing higher electricity prices in Pennsylvania?
The Pittsburgh Post-Gazette reported that rate increases took effect across the state on June 1 as utilities updated their charges to reflect higher wholesale prices. Duquesne Light customers can expect their average monthly bill to increase from $137.99 to $147.41, and West Penn Power customers should plan for price hikes from $146.61 to approximately $154 per month.
Because the costs of energy have increased by roughly 44% on the regional transmission grid that manages the reliability and wholesale electricity market for Pennsylvania, PJM Interconnection, local utilities are forced to pass on costs to consumers. These price adjustments, which change every three months to keep up with market prices, account for around 50% of the total utility bill.
PJM coordinates electricity across 13 states, including Ohio and New Jersey, where electric supply costs are expected to rise by 10% to 36% this month.
Other factors contributing to surging electricity prices include the retirement of older power plants, particularly coal plants, before new ones come online to replace them; transmission bottlenecks; an extraordinary demand from data centers; a resurgence in manufacturing; and the transition to clean energy.
Why do higher energy prices matter?
The northeastern U.S. is already experiencing higher costs of living and inflation rates than the national average. If customers are also saddled with skyrocketing electric bills, they may have little breathing room and trouble keeping up with bills.
However, these rate hikes are generally beyond the control of regional grid operators, which are at the mercy of complex factors that impact prices, as Seth Blumsack, a professor of energy policy and economics at Penn State University, explained to the Gazette.
"In the electricity market, there are big portions of people's bills that are" determined elsewhere, he said.
While customers worry about higher electric bills, it's worth noting that the push to build data centers has a larger impact on our shared environment. Data centers require massive amounts of energy — often derived from dirty fuels — and consume valuable resources, such as land and water, ultimately harming wildlife and ecosystems.
What's being done to help customers save on electric bills?
As the Gazette noted, the Pennsylvania Public Utility Commission provided tips for customers to save money on bills this summer as temperatures rise. These include upgrading to energy-efficient appliances, sealing leaks, using fans to reduce air conditioning needs, and setting your smart thermostat to an energy-saving setting when you're away from home.
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