Home utility bills have been increasing for many consumers as more people spend more time at home. Extreme weather events also seemed to contributed to higher utility bills in 2021.
In 2020, median household electricity usage rose by 8.2 percent year-over-year, and only declined slightly in 2021. Between April and October, the period of peak electricity, households across the United States were paying $55 more year-over-year in 2020 and again in 2021.
Although the evidence supporting this date shows that the increase the findings is in part due to the COVID-19 pandemic, extreme weather has had much more of an impact on utility bills.
The clearest example is the Texas ice storm in February 2021. This extreme weather event resulted in a 76.9 percent increase in average daily usage with a peak increase on utility usage happening at 144.9 percent on February 16th. Nearly 50 percent of U.S. households also experienced higher bills this past winter. This marked an increase of 30 percent over last year, according to the federal Energy Administration. Natural gas bills are expected to continue to average $746 from Oct 1st to March 31st, which is an increase from $573 during the same period last year.
But what about inflation?
The recent rise in inflationary trends would indicate that this also might be a factor in rising home utility bills. However, 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. Of course, inflation can occur when prices rise due to increases in production costs, such as raw materials.
But if there is evidence of inflation in electrical costs, its more likely that the surges in demand for products and services causes inflation as consumers are willing to pay more for the product.
Source: Greater Illinois Title Co. Real Estate Digest, March 2022