Maryland Experiences Highest Jump in Electricity Costs Since 2008

Have you noticed your electricity bill being higher than normal? If yes, you’re not alone! As Maryland electricity rates continue to rise at a rapid pace, we decided to see just how much the cost has increased over recent years. The rate for residental electricty has increased by over 14% since 2022, meaning you will pay a much higher price for electricty, even if your usage does not chage. The most recent jump in cost was recorded by the U.S. Energy Administration and continues to illustrate our need to switch to a more cost effective solution.

How Does the Utility Company Come Up with Your Bill?

Your bill has two types of charges: flat and pay per use. The majority (usually well over 90%) of your bill is made of the pay per use charges, with the flat fees being around $10 per bill. The pay per use charge depends on how many units of electricity you use that month, measured in kilowatt hours (kWH). Intuitively, this makes sense as the more electricity you use, the more you pay. But then how is that rate determined?

Firstly, they charge for the supply of electricity. This is the cost to create that electricity, which is usually done with natural gas, nuclear, or coal. This is known as an energy or generation charge. Next, there is a distribution or transmission charge, which is to get the electricity from the power plants to your home. This includes the grid, powerlines, transformers, and transfer stations. Additionally, there is usually a host of other charges. We’ve seen Bill Stabilization Charges, Power Cost Adjustments, Environmental Charges, Cogeneration PURPA Surcharges, and Admin Charges, just to name a few. Lastly, there are taxes. All of those charges combined give you the final price per kWh. If you multiply the kWh you used that month by that final charge, that will give you your price per kWh. 

The Increasing Costs

In 2022, the average cost per kWh is 14.46 cents per kWh used. This means that if you use 2,000 kWh in a month, your bill would be $289.20 (2,000 kWh multiplied by 14.46 cents per kWh). With the new rate from 2023 of 16.59 cents per kWh, your bill would be $331.80, which is $42.60 more than last year. This means that, even if you use the same electricity as you did last year, you would pay $511.20 more in 2023 year than in 2022.

While this spike is cause for concern, it is by no means the exception to the norm. Rates have been rising steadily in Maryland. Since 2005, there has been an average of 4.35% increase in cost per year. This may seem modest, but the compounding growth quickly adds up. Consider the example above. In 2007, the rate was 11.89 cents per kWh, meaning that using 2,000 kWh would cost you $237.80. Comparing that to the $331.80 of today, that is a jump of 39.5%! 

Looking Forward

As of April 2024, the cost of electricity has already increased to 17.48 cents per kWh. With nonreweables such as natural gas and coal becoming more expensive, the growth rate of 4.35% is only going to increase Most people see relying on the utilty as their only option, but we propose a better solution; ditch the electric company and become your own. If you own and produce your own power, you can create it for much cheaper than the electric company, and you get to avoid the delivery and other charges as well. Not only is it cheaper, but the price is set, not subject to rate increases set by the electric company. Read more about creating your own power here or reach out today to schedule a solar consultation!