Biden’s Green-Energy Price Shock The cost of electricity has climbed by 29.4% since January 2021.
Do White House officials pay electric bills? They strangely keep saying the President’s climate agenda is reducing electric-power rates even as the cost of running your dishwasher is sky-rocketing, as illuminated by the Labor Department’s consumer-price index.
The nearby chart shows the average change in electricity prices over the last decade. Electric rates remained relatively flat in the seven years before President Biden took office, rising 5%. Thank cheap natural gas. Yet since January 2021 electricity prices have soared 29.4%—about 50% more than overall inflation.
By our calculation, electricity prices have increased 13 times faster under Mr. Biden than across the previous seven years. His policies aren’t entirely to blame. But most of it is a result of the left’s climate agenda, and the price increases will get worse.
Federal regulations, renewable subsidies and state green-energy mandates are forcing fossil-fuel and nuclear plants to retire prematurely. Solar and wind need backup from so-called peaker gas plants, usually at a hefty premium. During power shortages, spot prices can hit $10,000 per megawatt hour compared to $30 to $60 on a normal basis.
State net-metering programs also subsidize people with solar panels for excess power they remit to the grid. People without solar then pay more for the grid’s fixed costs, which are also growing as more renewables are added. In California an average customer without solar pays 10% to 20% more to subsidize solar.
The costs of hardening the grid to support the government’s green energy transition are also increasing, including new high-voltage transmission lines, power transformers and battery storage. The Biden Administration’s electric-truck mandate alone will cost utilities $370 billion to upgrade their networks. Utilities will pass on their increasing costs to customers over time.
Higher interest rates are also increasing the cost of new green-energy projects. The Inflation Reduction Act (IRA) tax credits can offset up to 50% of a project’s cost, but offshore wind developers say this isn’t enough and are demanding to be paid higher rates—often four times more than natural gas plants.
By driving more baseload power plants out of business, IRA subsidies will increase electric bills even more. Businesses pass on their higher energy costs to customers. U.S. manufacturers will become less competitive, which is why some Members of Congress of both parties are pushing for a carbon tariff. Watch as the prices for cars and appliances rise.
The Inflation Reduction Act may be the biggest legislative misnomer of all time. Our friends on the left wonder why Americans are in a sour mood about the economy. Perhaps they all have solar panels.
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