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'A lot of people need help': Soaring electric bills leave some struggling to pay

The current prices are “some of the highest energy prices and electricity prices we’ve seen in recent memory," one analyst said.
Power lines in Pownal, Maine.
Power lines in Pownal, Maine.Robert F. Bukaty / AP

A spike in electricity prices, owing partly to the high cost of natural gas, is sending customer bills in cities, including New York, to historic highs and leaving some Americans to grapple with prices that are climbing faster than they can keep up with.

Electricity prices surged 10.7 percent higher in January from the same time last year.

The current prices are "some of the highest energy prices and electricity prices we’ve seen in recent memory, if not ever, depending on the geography,” said Julien Dumoulin-Smith, an analyst at Bank of America. “That is hitting consumers right now.”

Electricity prices are going up in large part because the U.S. gets about 40 percent of its power from natural gas power plants, said Neil Kalton, a Wells Fargo equity utility analyst. And natural gas prices have been rising as demand increases and supply is constrained.

“For these natural gas power plants, their cost is going up, and that is getting reflected in power prices” for the consumer, Kalton said.

Prices increases are likely to be particularly noticeable in places where electricity is linked to natural gas, including the Northeast and along the Gulf Coast.

The New York metropolitan area, including the New Jersey cities of Newark and Jersey City, recorded “the biggest increase in electricity prices” in over 50 years in January, said Martin Kohli, the chief regional economist for the Bureau of Labor Statistics.

Household energy prices in that region rose by 17.2 percent from December to January, with a 28.2 percent jump in electricity prices. The surge, the bureau said in a statement, was "the largest over-the-month increase in the history of the series which began in 1971.”

Electricity prices are rising as pandemic-driven price inflation has affected groceries to rent.

Inflation rose faster than expected in January, to 7.5 percent, compared with the same month last year, exceeding the 40-year high set in December, according to the latest release of the monthly Consumer Price Index by the Bureau of Labor Statistics last week.

“We’re in a difficult time for consumers. Prices are going up for lots of things,” Kohli said.

Kohli said that when prices surge for necessary goods and services, it can force people to make tough decisions about how to respond.

“It’s harder for consumers to decide that they’re not going to use so much electricity,” he said. “For people who rely on electricity, this is a sobering development to have this kind of a large increase.”

The number of people looking for help to pay their bills has grown as electricity prices climb, said Tanya Jones, the director of energy assistance and community development at HeartShare Human Services, a nonprofit organization that provides utility assistance for low-income consumers in New York.

"It was really a shock to them,” said Jones, who also is on the board of the National Energy and Utility Assistance Coalition, a group of nonprofit groups and utilities across the country. “We are getting a surge in customers because a lot of people need help.”

Amy Sananman, a senior vice president of United Way of New York City, said such increases in energy bills are “going to have a ripple effect on New Yorkers who are going to be forced to tighten budgets elsewhere, and that might mean food, housing, health care and education.”

Jones said: “There are more people that are trying to figure out what to do as far as maintaining their household and providing for their families, and so it’s really hard. We’ve braced ourselves, and we’re ready to provide as much assistance as we can.”

Last week, New York Gov. Kathy Hochul called on the utility company Con Edison to review its billing practices and communications with New Yorkers after the recent price spikes.

“The extreme utility bill increases we are seeing across the state come at a time when New Yorkers are already struggling financially following the Covid-19 pandemic,” Hochul said in a statement. “Even though the spike we are seeing in electricity, natural gas and fuel prices were predicted and are due to severe winter weather, I am calling on Con Ed to review their billing practices because we must take unified action to provide relief for New Yorkers, especially our most vulnerable residents.” 

Con Edison said in a statement that changes in customers’ bills “are mainly due to the supply cost of the energy commodity.”

“Natural gas is a driver of electricity costs as it is used by generation plants to create electricity. Con Edison does not make a profit on the commodity. We buy the energy on the wholesale market and provide it to customers at the same price we paid. Energy prices are volatile and can be affected by factors such as weather, demand, and economic trends,” the company said.

Con Edison said it was reviewing “all of our practices that affect customer supply costs, including our energy-buying practices, the tools we use to reduce supply price volatility, the way we communicate changes in supply prices, and our programs to help customers who have fallen behind on their bills.”