Falling Demand Yet Higher Electricity Prices: Clean Energy to the Rescue

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If you’ve taken steps to save on electricity at home, but you’re not currently thinking about installing a solar energy system right now, consider the following.

A recent Associated Press headline read, “Shocker: Power Demand From U.S. Homes is Falling” but the real shocker came later in the article.

“Suddenly faced with shrinking sales, some utilities are asking for regulatory changes so they can charge higher rates per kilowatt hour in exchange for helping customers further reduce consumption . . .” Doesn’t this violate the basic law of supply and demand—that as demand goes down, prices go down, too?

Utilities Inevitably Must Raise Cost of Electric

Unfortunately, the price of electricity is not subject to the law of supply and demand–it is not set by market forces, but by state regulators. Those regulators have a goal. By allowing utilities to charge higher and higher electricity prices, regulators hope to provide consumers with stronger incentives to save even more electricity. Why? Because as the AP article points out, “it is now cheaper for utilities to help customers cut back than to build a power plant.” But what happens when, inevitably, consumers run out of ways to cut back on the electricity they use at home? Then they’ll have no alternative–they’ll simply have to pay more for electricity as prices continue to rise.

So if you’ve done everything you can to save electricity at home and your electricity bill is still going up, how can you take ultimate control over what you pay? By generating your own electricity, with solar panels, a wind turbine, or a combined heat and power system. In most cases, you can avoid paying your utility company for electricity altogether. There’s even a chance that you could sell your excess energy back to the utility company and have them pay you! Now there’s a shock.

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