Declining energy prices extend to electricity

After years of steep increases, costs to build power plants and transmission lines have started to fall, promising to temper electricity rate increases for consumers, according to a report out Wednesday.

The development is notable because the nation is poised to build the biggest wave of plants in a generation to meet rising electricity demand, and capital costs make up 50% of utility rates, says Larry Makovich, a managing director of Cambridge Energy Research Associates. CERA conducted the study.


Construction costs have dipped 5% the past year and will likely drop an additional 7% to 10% next year, says Candida Scott, CERA’s senior director of cost and technology. If the recession persists into 2010, further decreases are likely, she says.

Behind the trend are plunging costs for raw materials such as steel and copper amid the global economic slump. Steel prices have tumbled nearly 30% in recent months, offsetting a sharp run-up earlier this year, Scott says.

USA Today