American businesses and households are experiencing record electricity prices this year as costs for natural gas and coal surge relentlessly. From the pandemic fallout, natural disasters, Russia’s war in Ukraine and more, global economic turbulence has caused a global energy crisis. Meanwhile, demand for electricity in the U.S. continues to increase after unusual heat waves swept the nation. As fears of continued inflation heighten across the country, rising utility rates have proven to be an even bigger threat.

Across the country, utility providers are forced to pass higher supply costs onto its consumers. According to the U.S. Bureau of Labor Statistics, electricity bills jumped 15.8 percent this past August compared to August 2021 and U.S. power prices hit a 41-year high. With little signs of slowing down, locking in today’s energy rates may be the best way property owners can avoid future price spikes.

Rising Electricity Rates from Coast to Coast

The impact on New York has been particularly severe, with Con Edison – serving roughly 3.3 million customers – preemptively warning consumers of an increase in winter costs as high as 32 percent. For New York’s commercial property owners, electricity rates are 51 percent higher than the national average. Eversource Energy also raised electricity rates at the start of January 2022 for its 3.6 million customers throughout Connecticut, New Hampshire and Massachusetts to account for higher wholesale prices.

California, home to some of the highest utility bills in America, is also undergoing significant rate increases. While investments from the state’s largest utility providers to reduce powerline-related wildfires initially triggered higher rate prices in California, summer 2022 brought its own challenges. Historic heat waves throughout the state exacerbated the electric grids as air conditioning pushed electricity demand higher than the last 20 years for an all-time record.

To cover higher supply costs, rate increases went into effect for San Diego Gas & Electric customers at the beginning of 2022 while Pacific Gas & Electric (PG&E) also raised rates by 8 percent. PG&E’s rate hike includes a 10 percent increase for small businesses and a larger increase for industrial facilities, for an average increase of 12.69 percent across PG&E’s entire customer base.

Go Green, Save Green

Unfortunately, the future is looking just as expensive – if not more. PG&E, for one, is proposing 22 percent rate hikes from 2023 to 2026 and inflation continues to rise across the board for energy, food and services. For commercial properties with large energy loads, rising electricity bills can cut into working capital and revenue significantly.

There is a silver lining, however, in the rise of solar projects. The economic uncertainty of today’s energy climate is making commercial solar installations more attractive than any other environmentally sanctioned initiative. With solar, commercial property owners can lock in today’s energy rates or lower – often at a price lower than the local utility – to protect against future energy price increases.

While solar may seem like a large capital expense, especially during times of economic downturn, options like Power Purchase Agreements (PPAs) allow property owners to install solar at no-upfront cost and do not require personal or corporate guarantees.

Under a PPA model, a third-party provider – like Luminia – finances and manages the installation of solar on your property, and you simply purchase the system’s electric output from the third-party provider for a predetermined period of time for lower than utility rates. Property owners benefit from immediate savings in energy costs that are locked in for the course of the agreement (typically 25 years).

Luminia’s Clean Energy PPA® also includes a production guarantee as well as worry-free operation in the form of 25-year maintenance and lifetime equipment replacement. Plus, if you ever need to sell the property, the PPA automatically transfers with the sale.

Click here to learn how Luminia’s suite of financing can protect you from high electricity costs while also increasing net operating income and cash flow.

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