Keeping the Lights on and the Prices low for 100 Years

I don’t know about you, but the economics of housing and oil confound me sometimes. Surely the unbreakable laws of supply and demand are in play there, but those who buy, sell and broker those things often appear ignorant of history, building so much in rising tides that the inevitable wipeout comes. We’ve seen the booms and busts roll across our history over and over again. Why don’t the so-called experts ever remember that?

Most things cost a lot more than they used to, duh. Various historical pricing data shows that a loaf of bread cost about 9 cents in 1930. Now it’s $2 or so, depending on your location and brand. Twenty-two times more, although that’s relatively keeping in time with wage growth. The average home cost close to $10,000 in 1950, about twice the average family income. Now that house costs close to$300,000 or five times annual income.

Electricity delivery is another matter, one that’s connected to energy and yet rides a different inflationary rail altogether than oil or gas. I still remember going to the CLEAResult Energy Forum in Austin, Texas a few years back and hearing Eversource Energy energy efficiency expert Tilak Subramanian recount how Austin Energy was basically charging customers close to 9 cents per kWh, essentially the same price as in 1923. Talk about your bargains.

I did a little more research combing through U.S. Energy Information Administration web data to support this. One EIA site indicated that the average cost of residential electricity 58 years ago was 2.6 cents per kWh (14 cents in real dollars adjusted for inflation). Commercial customers paid 2.4 cents (12.9 real) and industrial an all-time bargain at 1.1 (5.9).

What’s the 411 on pennies per kWh in 2018? (People from 1960 might get that reference). The EIA’s most recent release shows that U.S. residential customers were paying about 12.62 cents as of February, while commercial and industrial were shelling out 10.6 and 6.75 cents, respectively.

I am once again reminded of Subrahanian’s observation in 2016: “You can’t accomplish this without a lot of innovation.”

I’m not saying you should pat yourself on the back, power grid industry, because the pressure is always on from customers, regulators and your own drive. The sad thing is that customers, and the public in general, are usually completely in the dark, only metaphorically speaking, on this long-running historical bargain.

That’s where we at POWERGRID International come in, month after month. We cover energy efficiency, data analytics, vegetation management, smart lighting, metering and whatever else the wizards at Hogwarts school of electricity innovation are doing to keep the lights on and the costs down.

This May issue of the magazine is no different. We cover voltage analytics (page 20), drone inspections (page 23) and connecting energy and the internet in tandem for greater resiliency (page 32). Our cover story focuses on what utilities are learning about wildfire ignition and adjusting their vegetation management plans accordingly (page 10).

Utilities spend billions on all of these fronts to give customers a necessary product that only costs pennies on the dollar compared to cars, gasoline and milk relative to inflation through the ages. They are all necessary and good, but it”˜s gratifying to see an industry that prizes efficiency and innovation perhaps more than others. Carry on.

Keeping the Lights on and the Prices low  for 100 Years
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