Prices for electricity are starting to sputter
Reduced cost of natural gas is a key factor
By Tom Stundza -- Purchasing, 11/5/2008 3:14:00 PM
Electricity prices are falling in many areas. Through mid-summer, electricity prices nationally in 2008 had increased by almost 6%, according to the Department of Energy, with industrial rates more than 9% higher than in 2007. However, electricity has been cheaper in recent weeks as utilities in the Northeast, the Mid-Atlantic states, Florida, Texas and California are cutting power rates.
Reason: The costs for natural gas, fuel oil and coal paid by power plants have been sliding since late summer. Natural gas prices especially have plummeted as the anemic economy has dampened consumption at a time when supply has jumped as extraction from shale-rock deposits has increased.
A USA Today report points out that prices for future natural gas contracts peaked at about $13 per million Btu (British thermal units) in early July. They are at $7.22 thnis week. Meanwhile, prices for oil used by power generators have fallen by more than half. Coal prices, which more than doubled since last year, have stabilized.
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