Inflation is falling, but not your electricity bill. Here’s why.

Although Inflation has steadily cooled Since the peak in June last year, electricity prices continue to heat up.

The average electricity bill this summer is set to increase by about 2 percent compared to a year ago. According to To the Energy Information Administration. The reason: While wholesale electricity prices have fallen, there’s usually a lag when such declines filter through the prices residents see on their monthly electricity bills.

“Although wholesale electricity prices have declined significantly so far in 2023, these lower prices may not be reflected in retail prices until later this year or into 2024,” the EIA wrote.

Most electricity in the U.S. — about 40% — is generated by burning natural gas, the price of which hit a 14-year low before collapsing in early 2023.

“A lot of utilities buy natural gas in the fall, and they try to spread it out over time so customers don’t get hit with a big bill right away,” said Mark Wolff, executive director of the National Energy Assistance Directors Association. ” .

“It’s kind of confusing if you’re a consumer,” he said. “Consumers look at gasoline, and say, well, gasoline has come down, why am I still paying more for heat and electricity?”

Most utilities also need to ask regulators to approve price increases — another reason for price delays. And in addition to fuel prices, utilities’ labor and maintenance costs are still rising.

“Utilities are rebuilding their grids, which is expensive,” Wolff said. “Half the cost of electricity a customer buys is on the wires. So just because the cost of natural gas fuel has gone down doesn’t mean there’s a correlation.”

Electricity prices vary across the country, with the average cost of electricity in New England being double that of the cheapest region, the Mountain West. New Englanders should see a typical monthly bill of about $180 this summer, the EIA predicts — $14 more than last year.

“The New England Power Market Experienced. Record breaking cold weather This past winter and, combined with limited natural gas pipeline capacity, put upward pressure on natural gas prices, which ultimately affects regional electricity prices,” the EIA said.

In contrast, monthly bills in the Southeast are forecast to drop slightly, to about $187, or $8 less than last year, as the EIA expects a cooler summer in the region, which means air conditioners. Less use of

A caveat to such predictions: Weather carries a great deal of uncertainty. “If temperatures are much warmer than expected, households will experience higher electricity bills, particularly in southern states,” the agency said.

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