Winter is coming.
As Americans start to think about the costs of heating and lighting their homes during the cold and short days of the season, they might be peeved by the news that the price of electricity jumped in September.
But the outlook going forward may calm them down: electricity prices are expected to decline as the U.S. heads into winter.
The Bureau of Labor Statistics said on Thursday that the cost of electricity had jumped by more than 1 percent last month, compared to a rise of only 0.2 percent in August. But the U.S. Energy Information Administration (EIA) is forecasting that retail electricity prices will tick down in the coming months, on the back of a fall in natural gas prices.
Wholesale natural gas prices are expected to drop 14 percent compared to last year, which will bring down retail costs for households by a fifth across the board.
"Because natural gas is the most common fuel used to generate electricity in the United States, we expect that retail electricity prices will also be down slightly (2 percent) from last year, as the lower price that power plants pay for natural gas passes through to retail electricity rates," the EIA said in a report released on Wednesday.
Analysts at the EIA predict a slight decline in residential electricity prices this winter, with U.S. prices averaging 15.2 cents per kilowatt.
There are regional variations in consumption and cost, however.
"For the upcoming winter, the largest driver of changes in electricity expenditures we forecast is the level of consumption. For the West, we forecast 10 percent less residential consumption this winter than last because of milder expected temperatures. In contrast, our forecast of winter consumption rises by 5 percent in the South," the EIA said.
The Bureau of Labor Statistics' figures showed that energy rose by 1.5 percent in September, compared to 5.6 percent in August, while the cost of natural gas fell for the month and for the year—bolstering the forecast of a decline in electricity prices.
Natural gas prices fell 1.9 percent over the month. Over the year to September, it dropped by nearly 20 percent.
The EIA added: "U.S. households that heat primarily with electricity will spend an average of about $1,060 this winter on their electricity bills, which is about the same as last winter.
"A slight increase in forecast average U.S. electricity consumption is offset by an expected 2 percent decline in U.S. residential electricity prices."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
To read how Newsweek uses AI as a newsroom tool, Click here.
