My Utility Bill Keeps Increasing: What Are My Solar Options?

| 12/4/2015 11:09:00 AM

Most of us have noticed our utility bills increase considerably over the past decade and it’s not all attributable to greater electricity consumption (although that is also part of the problem). Homeowners are also paying more for each kWh they use. In fact, electricity rates have increased everywhere in the United States in the past decade, but the rates vary significantly from state to state. The rates also change from month to month, so we use a handy metric to compare rates across the U.S. in a consistent manner, the rolling 12-month average electricity rate.

As of August 2015, Washington has the lowest rate at 8.83 cents per kWh, whereas Hawaii has the highest at 32.55 cents per kWh. Within the contiguous U.S., Connecticut has the highest rate at 20.97 cents per kWh. The average rate across the U.S. for the same period was 12.61 cents per kWh. Find out how your state compares.  

If you happen to live in one of the states with higher than average electricity rates, you might be considering a switch to solar energy. In my post last month, I discussed how to determine if solar energy makes financial sense for you. This month, I will explain some of your options.

Status Quo

Many homeowners will put off the decision or opt to do nothing and stick with their utility. This might be the right decision in some states or for some particular cases, but for those of you who would do better by switching to solar, it’s important not to delay too much, as the federal solar investment tax credit (ITC) is set to expire at the end of 2016.

If you’re unsure about whether you should stick with your utility, maybe you want to consider by how much your electricity rate has increased over the past decade. We call this the escalation rate. The average year over year escalation rate across the U.S. from 2005 through 2014 was 2.9 percent.  If you want to compare that to the average year over year rate of inflation rate in the U.S. since 2005, it was about 1.9 percent. In many states, the escalation rate for electricity has exceeded the inflation rate over the past decade.

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