Christmas Lights? Electricity Price Index at All-Time High in U.S.

December 23, 2013 - 3:39 PM
Christmas lights

Christmas lights at home of Norm and Michele Rados, Olmsted Township, Ohio, Dec. 12, 2012. (AP Photo/Mark Duncan)

(CNSNews.com) - Turning on the Christmas lights on a house or a Christmas tree this November cost Americans more on average than it has before, as the seasonally adjusted electricity price index hit an all-time high in the United States in November, according to data released last week by the Bureau of Labor Statistics.

The average price for a kilowatt hour of electricity also set a record for the month of November, according to BLS.

During the year, electricity prices tend to bottom out in the late fall, winter and early spring and hit a peak in the summer. Electricity prices followed that pattern this year, but in each month of the year they set a record for that particular month—n.b. electricity was more expensive in January 2013 than in any previous January, etc.

Electricity Price Index

This November, the average price for a kilowatt hour of electricity was 13.0 cents. That was down from the 13.2 cents in October and 13.7 cents in June, July, August and September. But it was the most a KWH of electricity has ever cost on average in the month of November since BLS started reporting the average price of KWH of electricity in November 1978.

The BLS has set the 36 months from January 1982 to December 1984 as the base period for its price indexes, including the electricity index. The average index level for that period is set at 100.

“By using seasonally adjusted data, some users find it easier to see the underlying trend in short-term price changes,” says BLS in explaining its seasonally adjusted indexes. “It is often difficult to tell from raw (unadjusted) statistics whether developments between any 2 months reflect changing economic conditions or only normal seasonal patterns. Therefore, many economic series, including the CPI, are adjusted to remove the effect of seasonal influences--those which occur at the same time and in about the same magnitude every year. Among these influences are price movements resulting from changing weather conditions, production cycles, changeovers of models, and holidays.”

Monthly average price

The seasonally adjusted electricity index for November was 202.284, which means that over the past 30 years electricity prices have essentially doubled from the baseline of 100. The seasonally adjusted electricity index for November 2012 was 196.542, which means the index has increased 5.742 points since a year ago, or 2.9 percent.

Escalating electricity prices have not been inevitable in the United States. The BLS’s month-by-month seasonally adjusted electricity index goes back to January 1952 (see chart). That month the index was 27.5. By March 1960, more than 8 years later, it had only risen to 29.9. By August 1967, despite intervening fluctuations, the seasonally adjusted electricity index was also 29.9.

Over the eight-plus years from January 1952 through March 1960, the seasonally adjusted electricity index went up 8.7 percent, and over the seven-plus years from March 1962 to August 1967, it went up 0 percent. By comparison, the seasonally adjusted Consumer Price Index for all items rose from 26.45 in January 1952 to 29.41 in March 1960, an increase of 11.2 percent.  And, by August 1967, it had risen to 33.50--an increase of about 26.7 percent from 1952.

Average electricity price

While the seasonally adjusted electricity index hit a record in November, the BLS’s overall energy index went down as the indexes for gasoline and natural gas fell. And, despite the increase in the electricity index, the overall decline in the energy index helped the overall Consumer Price Index for all urban consumers hold constant from October to November.

“The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in November on a seasonally adjusted basis,” said the release put out last week by the BLS summarizing the CPI data. “Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.

“The energy index declined in November, offsetting increases in other indexes to result in the seasonally adjusted all items index being unchanged. The indexes for gasoline and for natural gas fell significantly, more than offsetting increases in the electricity and fuel oil indexes.”

The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.