We are Doomed to Pay More and More for Electric Power

Electricity price inelasticity means that the laws of supply and demand are unlikely to cause electricity prices to drop in the future due to a lack of demand caused by rising prices. These higher prices will make it difficult to pass legislation encouraging the use of green energy. Consumption will probably not decrease and electrical power prices will continue to rise.

The Wall Street Journal puts it well in this quote taken directly from their article "Pain at the Plug: Fuel Costs Push Up Electricity Rates, Too

That raises some interesting questions. How easy a sell will climate-change bills like Lieberman-Warner be for Congress, when the bills will add between 11% and 64% to the cost of electricity which is already going vertical?

What will higher electricity prices do to demand for juice? When gasoline prices spiked in recent months, demand slumped for once. Normally, demand for gasoline is pretty inelastic in the short-term. Only sustained high gasoline prices lead to big changes, like more fuel-efficient cars, carpooling, and the like.

Demand for electricity is even less responsive to price than demand for gasoline is. Spot market rates for electricity aren’t posted across town, and you don’t pay the power bill every week.