Washington's Energy Indicators

22.  Energy Price Trends — Average Electricity Prices by Sector

REAL ELECTRICITY PRICES INCREASED DRAMATICALLY BETWEEN 1979 AND 1984. THE MAGNITUDE OF THE INCREASE WAS SIMILAR FOR ALL SECTORS, BUT THE RELATIVE INCREASE WAS MUCH HIGHER FOR THE INDUSTRIAL SECTOR.

The most notable phases in electricity prices are the long, slow decline of prices in the 1970s, the rapid increase between 1979 and 1984, and the period since 1984 when no trend is evident. Price trends for the residential and commercial sectors are nearly identical. Industrial sector prices have been more volatile than residential and commercial prices, increasing over 200 percent between 1979 and 1984, versus 50-60 percent for the residential and commercial sectors. On a per unit basis, however, the increases were similar for all sectors: 1.9¢ per kWh for the residential sector, 1.6¢ per kWh for the commercial sector, and 2.0¢ per kWh for the industrial sector.

Industrial prices have fluctuated as much as half a cent per kWh from year to year during the 1980s and 1990s. This may have as much to do with world aluminum prices as it does with Northwest electricity prices. Aluminum smelters, which account for nearly half of industrial sector energy consumption in Washington, paid electricity prices contractually linked to aluminum prices for much of the time period depicted.

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