Price evolution of electricity in the United States

1. Relevance of the price of electricity
2. Price evolution of electricity
   1. Absolute price of electricity per year
   2. Inflation adjusted price of electricity per year
3. Conclusion
4. FAQs about electricity's price in the the United States
5. Price evolution table and full chart

The price of electricity can change from state to state. Some of the things that affect these price changes are the energy sources that are available nearby, the density of the population in the area, transmission costs and regulatory policies.

In this article we've taken the national average for the price of electricity. This can be use to evaluate price trends, although specific prices might vary depending on which state you live in.

Price evolution of electricity

The average price of a Kw/h electricity between 1979 and 2023 was $0.10, with the lowest price being $0.05 in 1979 and the highest $0.16 in 2022 (at least within the timeframe we have data for).

Absolute price of electricity per year

Our data source for this article was: FRED .

The absolute price of electricity in the the United States has gone from $0.05 in 1979 to $0.16 in 2023. That's an absolute increase of $0.11, or 220% in a period of 44 years. (go to the next section for inflation-adjusted values).

Now, if you are hoping for a decrease in the price of electricity in the future, don't hold your breath. Considering that the price has only increased during a period of 44 years (like literally every year), there's no reason to believe that trend will change any time soon.

The biggest price increase was $0.02, or 14.29% in 2022.

Inflation-adjusted price of electricity per year

As accurate as the information above might be, it can also be somehow deceiving. This is because the value of money changes over time, usually decreasing. That means that $1 of today's money cannot buy as much as $1 in the past. This phenomenon is called inflation, and can make it complicated to compare historical pricing data. Luckily, we can adjust for it and calculate what a dollar value of the past would be equal to in today's money.

So let's not take a look at the evolution of the price of electricity in the the United States, in that same 44 years period between 1979 and 2023, but adjusting prices to inflation (aka. in today's money).

When we adjust for inflation, we see that the price of electricity actually peaked in 1982, when it cost $0.27 (in today's money), and was at its lowest in 2004 when it sold for $0.15.

The biggest spike in adjusted price was in 2014 when it jumped by $0.02 (11.76%).

The average price of electricity during this period of time, adjusting for inflation, has been $0.19, and the most current price of $0.16 is 15.79% below that average. Enjoy it while it lasts!

Conclusion

The absolute price of electricity has increased by $0.03 ($23.08%) in the last decade, and $0.11 (220%) since 1979. But that comes as no surprise, as prices always tend to increase over time due to inflation.

Now, as we've explained earlier, the absolute price of a product does not necessarily represent its affordability fairly. For that we have to look at its inflation adjusted price, or in other words, the price evolution in today's money.

When we look at the inflation-adjusted price of electricity, we see that it has varied ± 31.03% over this period of time, and is currently 17.24% cheaper than the average over these years.

So not everything is bad news after all!

Even at $0.16 (per Kw/h), electricity is actually more afordable in 2023 than it was in 1979.

So if there had to be one single take away from this article it would be this: The average person has to make less of an economic effort to purchase electricity today than in the past.

That being said, the current price of electricity might be somehow close to what it was in 1979 (in today's money, of course), but it has had so much volatily over the years that it's really hard to predict how it might evolve from here.

FAQs about the price of electricity in the the United States