Everything we need is too expensive, and just getting more expensive, right? And energy (gasoline, natural gas, electricity, etc.) is like death and taxes: you have to pay it forever, no matter what.
So what will your electricity bill cost you over the next few years? Below, we'll go through the tools that will help you figure it out, using Duke Energy Carolinas as an example (each utility company should have its usage rates, increase projections, and fees displayed on its website).
On September 1, 2022, your Duke Energy Carolinas rate will go up an astounding 9.6%, due to the rising cost of natural gas prices, and then will adjust to an overall 8.3% increase January 1:
The company’s other North Carolina utility – Duke Energy Carolinas – made its annual fuel filing in March. The company recently revised its Duke Energy Carolinas filing to reflect a January 2022 under-recovery on fuel costs; if approved by the NCUC, Duke Energy Carolinas residential rates would rise 9.6% in September to adjust for fuel and renewable energy programs, then decrease 1.3% on Jan. 1 when energy efficiency and demand management adjustments kick in.
As a Duke Energy Carolinas customer, this means your current rate per kWh is $0.114, but will go up to $0.125/kWh on September 1, and then will adjust to $0.123 on January 1, 2023.
To calculate the impact on your wallet, first look at your last power bill; under the graph, you will see "12-Month Usage". That is the number of kilowatt hours (kWh) you generally use per year. Multiply that number (say 11,000 kWh) times $0.114 (Duke's current rate per kWh), to get your annual usage cost under the current rate. Multiply that times the number of years you expect to continue paying Duke Energy for your power: 20, 30, 50 years? We will pay taxes and utilities as long as we live, right?
What did you come up with? For 11,000 kWh a year, that's $1,254 a year, and $37,620 over 30 years, and $62,700 over 50 years...but at next year's rate of $0.123, that's $1,353 a year, $40,590 over 30 years, and $67,650 over 50 years.
And that is due to one year's increase, with no future rate increases. Duke Energy's average annual increase over the last 15 years has been 4.7%. If we calculate an annual 4.7% increase from next year's rate of $0.123 (you may want to use this compounded interest calculator), the homeowner with 11,000 kWh/year would pay about $85,395 over 30 years, or more than $250,000 over 50 years.
And that's for a small house of low usage, about $100 a month right now for the Duke bill, at a low annual increase below the current rate of inflation.
What's more, North Carolina passed a new HB 951 energy law last October, with a goal of reaching net zero carbon emissions by 2050, explored in a separate post: What will NC's Energy Law Cost Duke Energy Customers? According to some watchdog groups, we can expect Duke Energy to raise rates as much as 50% over the next 3-5 years to offset more than $100 billion the company plans to invest in upgrading the state's energy infrastructure. A 50% rate increase sounds extreme, but the size of investment is unprecedented.
The result of a 50% rate increase would be this: next year's rate of $0.123 could be as high as $0.184 in five years, which would amount to $2,029.50 for the year (an average of $169.13 a month), as compared to $1,254 last year (or $104.50 a month).
If rates continue to go up at the historical increase after that 50% increase (continuing at 4.7% annually), that homeowner with 11,000 kWh/year would pay about $128,000 over 30 years, $228,000 over 40 years, and $386,000 over 50 years.
That is a potential swing from $37,620 to $128,000 over the next 30 years, based on current expected rate increases. And, with rising energy costs and inflation, we can expect other rate increases before we can expect Duke Energy to lower rates, right?
Also, please take note: these numbers are based on usage, not fees. If your current average utility bill is about $100 a month, you are probably paying $11-$15 a month in fees and taxes, which are imposed by Duke Energy separately from usage rates. Fees may change at a faster rate, but cannot be predicted or calculated. Fees and taxes add even more cost to your utility bill, and these also are likely to go up, because fees are not regulated.
After all, Duke Energy's primary goal is to increase stock prices for shareholders, not to save you money. And that's not to say Duke Energy is solely malevolent, but only that profit is the highest priority. In fact, Duke Energy provides a beneficial net metering program for home solar arrays, and is expected to continue to support residential solar as part of the state's aggressive Net Zero plan.
For qualified homes, solar provides a lower, set rate on a finite schedule, meaning you will shift the money you are currently paying Duke Energy over to your solar investment, at a lower rate that never goes up, and will eventually end. This keeps your money in your pocket every month, and helps you avoid rate inflation over time.
If you're interested in learning more and exploring solar options for your home, please contact me for a free consultation. We will review your electric bill, your home's energy efficiency, and potential solar array designs for your home. I will answer all questions and help you make the best decision for your family.
Jamie Duncan, Solar Consultant, Charlotte-Mecklenburg, Cabarrus County, Iredell County, Union County, Gaston County, Lincoln County, Catawba County
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