We have our second winner of the PUF Cross-Examination Award. The award goes to media and other statements that are so misleading they compel us to cross-examine.
Readers may recall the first winner. It was a July 5th article of the New York Times. The article, "Piles of Dirty Secrets Behind a Model 'Clean Coal' Project," implied a utility project in Mississippi has driven electric rates to unbearable levels.
The article hadn't noted that the state's residential rates have been falling, rather than rising. Nor did it note that rates were well below the national average.
The second winner is a tweet on Agust 18 by the broadly-followed editor of Utility Dive. Gavin Bade's tweet, referencing a Washington Post article on consumer prices, said:
"Electricity retail rates up more than 60% over the same timeframe, though regions vary widely."
So what's the problem?
Well, for one thing, Energy Department data shows the nation's average residential rates increased significantly less.
Very notably, ignoring general inflation. More on that below.
The timeframe in the Washington Post article was 1996 - 2016. This year, 2016, is obviously not over. Let's look at representative periods.
Residential rates increased 51% during 1996 - 2015. And have actually fallen 1% year-to-date since 2015. That's well short of 60%.
Residential rates increased 49% during May 1996 - May 2016, the latest month of Energy Department data. That's well short of 60%.
Indeed, you'd have to start the timeframe by five or six years earlier to come to a 60% increase. Extending it to 1991 - 2016, or to 1990 - 2016.
Rates across all customers, commercial and industrial customers included, increased 48% during May 1996 - May 2016. That's well short of 60%.
And, for another thing, all these amounts ignore general inflation. One of the main takeaways of the referenced Washington Post article: you must take inflation into account.
The article has a graph from the American Enterprise Institute. It shows how the prices of some consumer goods and services have increased by more than general inflation. And some have increased by less.
The prices of electric utility service were not in the graph.
The whole point? Some goods and services are becoming more expensive. Their prices are increasing more than inflation. Other goods and services are becoming more affordable. Their prices are increasing less than inflation.
Electric service is becoming more affordable. Its rates are increasing less than inflation.
Whether you use data from the Energy Department, Labor Department or Commerce Department. For virtually any time period through to the present.
Clearly, the technological revolution in natural gas production, popularly called fracking, has been a major reason for electric service's greater affordability. But you readers, who work at utilities and in utility regulation, deserve a lot of the credit too.
Back to the PUF Cross-Examination Award. We urge Utility Dive, the New York Times and others to take greater care, if and when they're inclined to imply that electric service rates and bills are rapidly increasing.
As the magazine-of-record for electric and natural gas utility policy and regulation, for eighty-eight years, Public Utilities Fortnightly will occasionally applaud and groan about media and other statements on our industry.
Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
