Electricity Prices in 2006 Showed Largest Increase Since 1981

October 22, 2007

OCTOBER 22, 2007 – Washington, DC – The retail price of electricity increased by more than 9 percent in 2006, the largest increase since 1981.  Fourteen states and the District of Columbia saw the average price of electricity rise by 10 percent or more between 2005 and 2006, according to  Electric Power Annual 2006, released today by the Energy Information Administration. 

Electricity prices increased in all regions of the country but most of the larger increases were in the East.  The main factor leading to these increases was the lifting of retail electricity price caps in States transitioning to competitive retail markets, allowing the pass-through to consumers of previous increases in costs that had not been completely reflected in prices during the duration of the caps.
Also in 2006, emissions of carbon dioxide, sulfur dioxide, and nitrogen oxides from electricity generation declined.  Sulfur dioxide emissions fell 7.9 percent, the largest drop since the 9.2 percent reduction in 2000.  Carbon dioxide emissions fell 2.2 percent, and nitrogen oxides emissions were down 4.1 percent.
The main factors in emissions reductions from electricity generation included:
* Decreases in overall generation from fossil fuels and increases in generation from nuclear, hydroelectricity, and wind, all of which are emissions-free.

* Changes in the mix of fossil-fueled generation, with less generation from coal and petroleum, which produce the highest rate of emissions, and more generation from natural gas.


Other developments in electricity markets in 2006:
* Electricity generation and sales to customers reached record levels in 2006, despite milder summer and winter temperatures dampening electric power demand for heating and cooling.  

* Total net summer generating capacity increased by nearly 1 percent, mostly in the form of natural gas-fired combined cycle units.  There were also significant increases in wind capacity in Texas and Washington.

* Net generation at nuclear plants increased by 0.7 percent, even though no new nuclear units were added.

* End-of-year coal stocks at electricity generators reversed the declines of the previous three years and ended the year at the highest level in 12 years.  The resumption of more normal railroad operations from coal mines in the Powder River Basin was a major factor in the recovery of subbituminous coal stocks.
Electric Power Annual 2006 can be found on EIA’s web site at: http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html


The analysis described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the press release and the analysis should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization.