Finding affordable energy is one of the most important factors in identifying and choosing the right site when a company is expanding or relocating — especially in the case of large industrial facilities. The electric power industry has seen significant changes in the last decade, with industrial electricity prices trending down due to the increase in natural gas supply.
Energy pricing can vary widely by state, by region and, importantly, within regions. At the same time, it is important to keep in mind that while electricity prices are important, a particular region should not be ruled out on these costs alone.
Electricity Pricing: Recent Trends
Electricity prices in the US have been stable or have seen downward pressure over the past couple of years. According to the US Energy Information Agency (EIA), US industrial electricity rates increased 11.9 percent over the 10-year period from 2006 thru 2015 (1.2 percent annually). However, prices declined by 2.1 percent from January 2015 to January 2016. The EIA has forecast virtually no price increase for 2016 and a 1.9-percent increase in 2017.
The largest driver for these record low costs is a significant increase in the supply of natural gas and the environmental pressure to convert to cleaner fuels. Many US utilities are converting or shutting down coal-fired generation facilities in favor of combined-cycle natural gas plants.
Regionally, US industrial electric prices vary considerably, with New England leading the country. As of January 2016, New England’s average price for industrial electrical power was 12.1 cents per kWh, nearly double the US average of 6.43 cents. The Pacific region is the next most expensive region, with average prices approximately 33 percent above the national average.
The rest of the country is much lower in price, ranging from .074 cents per kWh in the Mid-Atlantic region, to .056 cents per kWh in the West South Central region.
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