How will inflation impact your electricity bill in 2021?

Inflation isn’t something new and electricity rates increase an average of 2 – 4 percent every single year. But will

Inflation isn’t something new and electricity rates increase an average of 2 – 4 percent every single year.

But will the record-high inflation we’re seeing in 2021 start making electricity bills unbearable?

More importantly, how can you avoid it?

As you can see in this chart, as of June 2021, we’re seeing inflation at a rate that we’ve not seen since 2008.

The biggest price increases were recorded for used cars and trucks (45.2%), gasoline (45.1%), fuel oil (44.5), utility gas service (15.6%), and transportation services (10.4%). Shelter costs were up 2.6% and food 2.4%

Now let’s take a look at historic energy prices:

inflation and electricity bills in 2021
inflation and electricity bills in 2021

As you can see in these two charts, electricity prices have been steadily increasing for the last 20 years, regardless of inflation. In fact, in the last 20 years, there were only three years where electricity did not significantly increase in price.

Inflation is a measure of the rate of rising prices of goods and services in an economy.

Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages.

A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.

Electricity prices are determined by many factors but the three main factors are:

  1. The general demand for electricity (for example in summer electricity will be more expensive than in spring)
  2. Availability of generation sources (so how much electricity can be generated to fill that demand, balancing the supply and demand factor)
  3. Raw commodity costs/supply/demand (electricity is produced from certain commodities, which have a market of their own. If these commodities change in price, this will impact the price of electricity as well. Let’s take Natural Gas as an example. About 40% of the electricity you use is made from natural gas. As you can see in this natural gas market graph, the natural gas market is starting to climb which is starting to increase electricity prices as well. Here you can see the recent natural gas market prices going up. 
inflation and electricity bills in 2021

According to the energy information administration, the prices of electricity will continue to increase throughout 2021 and 2022.

As energy consultants, we’ve already started seeing a price increase of 5-7% and up to 15-20% in some major utilities in Ohio and Pennsylvania.

So what can you do?

Well, there are two things you can do.

  1. Pay more for your energy
  2. Payless for your energy

How do you pay less for your energy?

If you live in a state that offers energy deregulation or energy choice (video chimes in at the top) you have access to something called Energy Price Protection!

If you’re not familiar with energy deregulation, I highly suggest you watch this video now that answers the question: What is Energy Deregulation?

If you are familiar with energy deregulation, then you will know that by choosing a competitive energy rate from a retail energy provider in your utility zone, you can secure a set rate and guarantee it anywhere from 6 months to in some cases 7 years. This would protect your business against future inflation and higher electricity prices.

At energy professionals, we can help you find the best supplier, who has the most competitive pricing, and most importantly, agreement terms that best fit your unique business and energy usage. We also offer completely free energy analysis to see:

  1. If lower rates exist for your business that you could take advantage of and
  2. See if there are any other energy solutions that we can use to reduce your energy costs.

I hope you found this article helpful. Please feel free to contact me with any questions or if you need help finding lower energy rates! 

James Lightning

James Lightning
Senior Editor, Energy Professionals
(844) 674-5465
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