Electricity - The Electric Bill

The price paid by a consumer for electricity includes the cost of converting energy into electricity from its original form, such as coal, as well as the cost of delivering it. In 2000, according to the EIA's Annual Energy Review 2003 (2004), consumers paid an average of $20.04 per million Btu for the electric power delivered to their residences, compared to only $5.68 per million Btu for natural gas and $12.01 per million Btu for motor gasoline.

TABLE 8.1

Electricity overview, selected years, 1949–2003
(Billion kilowatthours)
	Net generation				Imports1		Exports1			End use
Year	Electric power sector2	Commercial sector3	Industrial sector4	Total	From Canada	Total	To Canada	Total	T & D losses5 and unaccounted for6	Retail sales7	Direct use8	Total
1Electricity transmitted across U.S. borders with Canada and Mexico.
2Electricity-only and combined-heat-and-power (CHP) plants within the NAICS (North American Industry Classification System) 22 category whose primary business is to sell electricity, or electricity and heat, to the public. Through 1988, data are for electric utilities only; beginning in 1989, data are for electric utilities and independent power producers.
3Commercial combined-heat-and-power (CHP) and commercial electricity-only plants.
4Industrial combined-heat-and-power (CHP) and industrial electricity-only plants. Through 1988, data are for industrial hydroelectric power only.
5Transmission and distribution losses (electricity losses that occur between the point of generation and delivery to the customer).
6Data collection frame differences and nonsampling error.
7Electricity retail sales to ultimate customers by electric utilities and other energy service providers.
8Commercial and industrial facility use of onsite net electricity generation; and electricity sales among adjacent or co-located facilities for which revenue information is not available.
R=Revised.
P=Preliminary.
E=Estimate.
NA=Not available.
(s)=Less than 0.5 billion kilowatthours.
Notes: Totals may not equal sum of components due to independent rounding.
Web Pages: For data not shown for 1951–1969, see http://www.eia.doe.gov/emeu/aer/elect.html.
For related information, see http://www.eia.doe.gov/emei/aer/elect.html.
SOURCE: "Table 8.1. Electricity Overview, Selected Years, 1949–2003 (Billion Kilowatthours)," in Annual Energy Review 2003, U.S. Department of Energy, Energy Information Administration, Office of Energy Markets and End Use, September 7, 2004, http://www.eia.doe.gov/emeu/aer/pdf/aer.pdf (accessed September 28, 2004)
1949	291	NA	5	296	NA	2	NA	(s)	43	255	NA	255
1950	329	NA	5	334	NA	2	NA	(s)	44	291	NA	291
1955	547	NA	3	550	NA	5	NA	(s)	58	497	NA	497
1960	756	NA	4	759	NA	5	NA	1	76	688	NA	688
1965	1,055	NA	3	1,058	NA	4	NA	4	104	954	NA	954
1970	1,532	NA	3	1,535	NA	6	NA	4	145	1,392	NA	1,392
1971	1,613	NA	3	1,616	NA	7	NA	4	150	1,470	NA	1,470
1972	1,750	NA	3	1,753	NA	10	NA	3	166	1,595	NA	1,595
1973	1,861	NA	3	1,864	NA	17	NA	3	165	1,713	NA	1,713
1974	1,867	NA	3	1,870	NA	15	NA	3	177	1,706	NA	1,706
1975	1,918	NA	3	1,921	NA	11	NA	5	180	1,747	NA	1,747
1976	2,038	NA	3	2,041	NA	11	NA	2	194	1,855	NA	1,855
1977	2,124	NA	3	2,127	NA	20	NA	3	197	1,948	NA	1,948
1978	2,206	NA	3	2,209	NA	21	NA	1	211	2,018	NA	2,018
1979	2,247	NA	3	2,251	NA	23	NA	2	200	2,071	NA	2,071
1980	2,286	NA	3	2,290	NA	25	NA	4	216	2,094	NA	2,094
1981	2,295	NA	3	2,298	NA	36	NA	3	184	2,147	NA	2,147
1982	2,241	NA	3	2,244	NA	33	NA	4	187	2,086	NA	2,086
1983	2,310	NA	3	2,313	NA	39	NA	3	198	2,151	NA	2,151
1984	2,416	NA	3	2,419	NA	42	NA	3	173	2,286	NA	2,286
1985	2,470	NA	3	2,473	NA	46	NA	5	190	2,324	NA	2,324
1986	2,487	NA	3	2,490	NA	41	NA	5	158	2,369	NA	2,369
1987	2,572	NA	3	2,575	NA	52	NA	6	164	2,457	NA	2,457
1988	2,704	NA	3	2,707	NA	39	NA	7	161	2,578	NA	2,578
1989	22,848	4	4115	2,967	NA	26	NA	15	223	2,647	108	2,755
1990	2,901	6	131	3,038	16	18	16	16	214	2,713	114	2,827
1991	2,936	6	133	3,074	20	22	2	2	213	2,762	118	2,880
1992	2,934	6	143	3,084	26	28	2	3	224	2,763	122	2,886
1993	3,044	7	146	3,197	29	31	3	4	236	2,861	128	2,989
1994	3,089	8	151	3,248	45	47	1	2	224	2,935	134	3,069
1995	3,194	8	151	3,353	41	43	2	4	235	3,013	144	3,157
1996	3,284	9	151	3,444	42	43	2	3	237	3,101	146	3,247
1997	3,329	9	154	3,492	43	43	7	9	232	3,146	148	3,294
1998	3,457	9	154	3,620	40	40	12	14	221	3,264	161	3,425
1999	3,530	9	156	3,695	43	43	13	14	229	3,312	183	3,495
2000	3,638	8	157	3,802	49	49	13	15	231	3,421	183	3,605
2001	3,580	7	149	3,737	38	39	16	16	R215	3,370	RE174	R3,544
2002	R3,698	R7	R153	R3,858	36	36	13	R14	R241	R3,463	RE178	R3,641
2003	P3,691	P8	P150	P3,848	P29	P30	P24	P24	P179	P3,500	E175	P3,675

FIGURE 8.2

The unit cost of electricity is high because of the amount of energy expended in creating the electricity and moving it to the point of use. In 2003, for example, about 39.6 quadrillion Btu of energy were consumed by electric utilities to generate electricity in the United States, but 13.1 quadrillion Btu was the net generation, after accounting for energy used by the power plants themselves. (See Figure 8.2.) Most of the remaining 25.8 quadrillion Btu was lost during the energy conversion process. Additionally, about 1.2 quadrillion Btu is lost during the transmission and distribution process (T & D losses). In the end, for every three units of energy that are converted to create electricity, slightly less than one unit actually reaches the end user.

Between 1960 and 1970, the price of electricity declined, but it began to increase during the 1970s because of the OPEC (Organization of the Petroleum Exporting Countries) oil embargo. (See Figure 8.4.) From the mid-1980s to 2003 the price of electricity, in general, dropped because of the decline in energy resource prices. Prices varied depending upon the location. As Figure 8.5 shows, in 2002 electricity was most expensive in the New England states, New York, New Jersey, Pennsylvania, California, Nevada, Alaska, and Hawaii. According to the EIA's Electric Power Annual 2002 (December 2003), the average price of electricity sold to the residential sector was 8.5 cents per kilowatt-hour in 2002, while the commercial sector paid 7.9 cents per kilowatt-hour. Industrial users paid less per kilowatt-hour, 4.9 cents in 2002, because the huge amounts of electricity they use allow them to receive volume discounts. The average price for all sectors across the United States in 2002 was 7.2 cents.