Analysis by Energy Workforce President Tim Tarpley
Having had conversations with a number of friends and family in different parts of the country this summer, complaints about the cost of living continue to be at the top of dinner table conversations. Food prices, especially, continue to remain stubbornly high. However, one thing consumers are beginning to notice across the board is that residential and commercial power prices are on the rise. Folks are not imagining this either; the facts back the perception up. Residential electricity rates have risen about 30% since 2021 and 5.5% in the past year alone. This rate doubles the normal inflation rate. Also important to our interests, natural gas has tracked higher in this same period, increasing 13.8% Gas prices are not the only thing going up. Wait times for gas turbines are growing by the day.
The US Energy Information Administration has taken notice. They now forecast that residential electricity prices are expected to increase by 13% to 18% by the end of 2026, far outpacing the CPI during the same period. Why is this happening? Well, it’s not a shortage of gas, for sure; we have more than an ample supply of gas in the United States. That is not the problem. The apparent issue is transporting this gas to where it needs to be to produce electricity and then moving the electricity to its intended destination once it is generated. In fact, a 2022 report by the DOE stated that the US needs to expand transmission systems by 60% by 2030 and triple them by 2050. This report may even be outdated; newer estimates are likely higher.
How will the US meet this growing demand and ensure that electricity prices remain competitive for US consumers and industry? Gas-fired generation is the quickest, most reliable and logical solution. Both large utility-sized gas-fired generation and smaller off-grid options will surely pick up most of this slack. New wind and solar technologies will undoubtedly play a role as well, but these technologies will always be hampered by intermittency and storage issues until battery technology improves significantly. Nuclear, both utility and small modular reactors, also show significant promise, but quick regulatory action will be needed to support this growth. Fortunately, DOE and other federal regulatory bodies are taking notice and quickly moving to approve new nuclear technologies and facilities.
What needs to happen to support the significant gas-fired power generation that is clearly going to be necessary, even with the help of other technologies? Permitting reform is vital. We need more grid capacity and gas pipeline capacity in the United States. 5 year build-outs for new gas pipelines will not get the job done. We need 1 year of build-outs. Fortunately, Congress appears to be taking notice and has moved comprehensive permitting reform up to the top of the list of actions in the coming months. EWTC has also put this at the top of our legislative targets. Comprehensive permitting reform will support the energy expansion that this country desperately needs and will support EWTC companies and our workforce. Before summer break, House Natural Resources Chairman Westerman (R-AR) and Rep. Jared Golden (D-Maine) introduced the bipartisan Standardizing Permitting and Expediting Economic Development (SPEED) Act. (link to our statement on it) This bill makes critical reforms to NEPA in order to streamline our federal permitting process.
This bill is worth supporting and will likely be a critical piece of a much larger bipartisan permitting reform package. EWTC will be working diligently over the next few months to support this effort. Failure is not an option. Should permitting reform not make it over the finish line before Christmas, it is likely to get delayed a whole year or two because it will become increasingly difficult to pass anything of substance in the run-up to the mid-term elections. America simply can’t afford to wait.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
