Thank you Bear, another great topic. Some additional data points to consider may be the operating cost specifically related to the home. I'll pick on the power bill as example: I just received notice of 13% rate increase for my residential power usage here. This is the first major rate increase I've seen in our market here in the past 3 …
Thank you Bear, another great topic. Some additional data points to consider may be the operating cost specifically related to the home. I'll pick on the power bill as example: I just received notice of 13% rate increase for my residential power usage here. This is the first major rate increase I've seen in our market here in the past 3 years. It goes into effect in March. Quick google implies that as of March last year PGE (largest distributor of power in CA) had notified its public utility commission of 18% increase to start Jan 2023. It stands out that on my notice (Northeast) it says that the PUC can't stop the rate increase and that it would go on the bill regardless, not sure if the same in the CA market or not - that PGE notice appears to be in a review process as far as I can tell from their online tracking system, but I wonder if they can still surcharge it in the mean time. Checking one of the other metro areas you covered here (Chicago) -- they seem to have notified of 18% increase starting by next year (as far as I can tell they already have about an 8% increase on the slate for this year. Even Florida Power & Light is increasing 10% starting in April. If 2022 was fuel, it makes me wonder about the impact of inflationary forces in 2023 via electric bill - something nearly every entity carries regardless of transportation needs and productivity area. Diesel effects a lot, including power. But power itself is probably an input for nearly all productivity (and leisure).
Along the same lines and tying in perhaps more directly to your original topic -- there is also a national (if not global) transformer supply issue: specifically pad mount transformers of the size that are typical for most residential service are extremely scarce and have increased dramatically in price to the end user as a result. In any area with new construction of the underground delivery variety -- this shortage is preventing new housing from being completed such that it can hook up to the grid. Current lead time is in the neighborhood of 70 weeks (according to my power company).
This is an interesting question that I've thought about as well - how do higher energy and utility maintenance costs ultimately hit the consumer.
In some states with highly deregulated markets like Texas, consumers have a wide range of options with respect to how they pay for electricity - either locking in fixed rates or taking "market prices" as they come. Though I believe most states have more of a fixed rate system which adjusts at various points in time.
As electricity costs have increased due to the higher cost of coal and natural gas over the past year much of that was initially borne by utilities, and there may be a lag effect of when it shows up on ratepayers bills.
Besides direct costs, there are the capital costs associated with the grid like the transformers you mention. Utilities generally operate on a "rate-base" system where they get to charge customers whatever covers their costs plus a 10% return on their capital base. They need Public Utility Commission approval for major capital projects, and they only get to adjust their rates periodically.
So to the extent that major maintenance or expansion has to be done (as is the case with PGE in California) or the general costs of operating a utility goes us (labor, materials etc), that hits consumers on a delay.
So to your point, I think that there are certain of inflationary costs that will trickle down to consumers on a lagging basis. I would consider these in the wide range of "carrying costs" associated with owning a home, which have increased as well.
Thank you Bear, another great topic. Some additional data points to consider may be the operating cost specifically related to the home. I'll pick on the power bill as example: I just received notice of 13% rate increase for my residential power usage here. This is the first major rate increase I've seen in our market here in the past 3 years. It goes into effect in March. Quick google implies that as of March last year PGE (largest distributor of power in CA) had notified its public utility commission of 18% increase to start Jan 2023. It stands out that on my notice (Northeast) it says that the PUC can't stop the rate increase and that it would go on the bill regardless, not sure if the same in the CA market or not - that PGE notice appears to be in a review process as far as I can tell from their online tracking system, but I wonder if they can still surcharge it in the mean time. Checking one of the other metro areas you covered here (Chicago) -- they seem to have notified of 18% increase starting by next year (as far as I can tell they already have about an 8% increase on the slate for this year. Even Florida Power & Light is increasing 10% starting in April. If 2022 was fuel, it makes me wonder about the impact of inflationary forces in 2023 via electric bill - something nearly every entity carries regardless of transportation needs and productivity area. Diesel effects a lot, including power. But power itself is probably an input for nearly all productivity (and leisure).
Along the same lines and tying in perhaps more directly to your original topic -- there is also a national (if not global) transformer supply issue: specifically pad mount transformers of the size that are typical for most residential service are extremely scarce and have increased dramatically in price to the end user as a result. In any area with new construction of the underground delivery variety -- this shortage is preventing new housing from being completed such that it can hook up to the grid. Current lead time is in the neighborhood of 70 weeks (according to my power company).
This is an interesting question that I've thought about as well - how do higher energy and utility maintenance costs ultimately hit the consumer.
In some states with highly deregulated markets like Texas, consumers have a wide range of options with respect to how they pay for electricity - either locking in fixed rates or taking "market prices" as they come. Though I believe most states have more of a fixed rate system which adjusts at various points in time.
As electricity costs have increased due to the higher cost of coal and natural gas over the past year much of that was initially borne by utilities, and there may be a lag effect of when it shows up on ratepayers bills.
Besides direct costs, there are the capital costs associated with the grid like the transformers you mention. Utilities generally operate on a "rate-base" system where they get to charge customers whatever covers their costs plus a 10% return on their capital base. They need Public Utility Commission approval for major capital projects, and they only get to adjust their rates periodically.
So to the extent that major maintenance or expansion has to be done (as is the case with PGE in California) or the general costs of operating a utility goes us (labor, materials etc), that hits consumers on a delay.
So to your point, I think that there are certain of inflationary costs that will trickle down to consumers on a lagging basis. I would consider these in the wide range of "carrying costs" associated with owning a home, which have increased as well.