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Along with the ongoing Russia-Ukraine war, U.S. customers are facing some of the largest electric bills in years as a result of surging oil and gas prices, seasonal pressure, and supply chain issues.
According to the U.S. Energy Information Administration (EIA), the average retail residential electricity price increased by 4.3% in 2021 to 13.72 cents per kilowatthour (kWh), its fastest rate since 2008.
"We forecast that residential retail electricity prices will continue to rise in 2022, although at a slightly slower rate," EIA researchers wrote. "In 2022, we expect the average nominal price will increase by 3.9% to 14.26 cents/kWh."
A natural gas supply crunch has made it more expensive for utility companies to buy or produce electricity. Those prices are then passed on to consumers. The cost of natural gas delivered to power plants averaged $4.98 per million British thermal units, more than double the cost in 2020.
Even before Russia invaded Ukraine, natural gas had seen a great deal of volatility. Domestic prices reached the highest levels in years ahead of winter as exporters shipped record amounts overseas, including to Europe.
The U.S. also placed sanctions on all Russian imports, including oil, which is expected to further constrain the supply of natural gas. Companies reliant on natural gas to fuel their electricity production are expected to increase prices.
Utility companies typically must get regulatory approval to raise prices, but it is essentially standard practice that regulators allow these companies to recoup higher fuel and supply costs through passing on the costs to consumers.
Adding to the pain for consumers, gas prices in the U.S. are at some of the highest levels in over a decade, though it has ticked down slightly within the past week. According to AAA, the national average gas price was $4.31 a gallon as of March 16.