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We sat down with our Head of Operations and “all things energy” guru Dan Schilens to talk about this year’s energy trends and its impact on consumers. We understand that the industry can be complicated, so Dan helps us break everything down in a simple, easy-to-understand manner. This is part II of the conversation; you can catch up on part I here.
Over the course of the last decade, the United States has realized that we sit on an abundance of natural gas resources. Because of this, natural gas has begun to replace coal as the primary source of electricity generation. Natural gas power plants run more efficiently and ramp up more quickly to cover high demands of electricity. This abundance of natural gas as a fuel resource and more efficient generation has led to more stable prices and, as a result, lower electricity costs.
There are plenty of opinions out there as to will this trend continue, but one factor to consider is that as the U.S. looks to become an exporter of liquid natural gas and that export demand increases, what impact it will have on natural gas prices. Higher demand could lead to slightly higher prices. Overall, natural gas prices have remained consistent leading to relatively stable electricity prices.
Overall, the U.S. has an ever-growing again infrastructure problem and the electricity grid is not immune to that. As transmission and distribution companies look to upgrade their infrastructure many have already started or plan to invest hundreds of millions of dollars into these updates.
Adding in the advancement in technology, smart meters, battery storage, etc. These capital expenditures eventually are baked into the transmission and distribution costs. These initial investments may result in a short-term spike in costs, but eventually should offset other costs including maintenance and repair.
State utility commissions are aware that these investments can drive up costs, and they try to manage to the best of their ability the overall impact to consumers by spreading out the recovery of those costs over an extended period of time.
Stay tuned for our final post in this series where Dan discusses how consumers can get the best energy rate and take advantage of living in a deregulated energy market.
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