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Why aren’t utility rates more closely tied to the rate of inflation?
The vast majority of costs incurred by a utility are for the cost of power plants, transmission lines, and fuel used for generating power, with fuel costs being extremely volatile. Utilities often go through building cycles when construction of facilities occurs at an accelerated pace to keep up with demand. From the mid-1980s to mid-1990s, there was relatively little construction of utility plants taking place and fuel costs were low and stable, leaving rates at that time largely unchanged. Since that time both those conditions have changed and rates have risen. However, over the last 20-25 years, electricity bills for some of the state’s utilities have increased less than the rate of inflation.
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