Electricity Prices By Year And Adjusted For Inflation

The average cost of electricity per kilowatt hour was 14.0 cents in May 2021, rising some from the price of 13.9 cents in April, according to data published June 10 by the U.S. Labor Department’s Bureau of Labor Statistics (BLS). In averaging the BLS’s monthly pricing data for electricity by calendar year, the price per kilowatt hour was 13.5 cents in 2020 versus 13.6 cents in 2019, marking a 0.7% decline.

The chart above and table below lists the average annual prices of electricity since 1979 and shows those prices adjusted for inflation in 2020 dollars.

Inflation Adjusted Electricity Prices (1979-2020)

Category: Electricity per kWh

Year Average Electricity Prices by Year* Average Annual CPI for Electricity** Electricity Prices Adjusted for Inflation in 2020 Dollars
1979 $0.050 65.600 $0.164
1980 $0.060 75.800 $0.170
1981 $0.069 87.200 $0.170
1982 $0.076 95.800 $0.170
1983 $0.078 98.900 $0.169
1984 $0.082 105.300 $0.167
1985 $0.081 108.900 $0.160
1986 $0.077 110.400 $0.150
1987 $0.079 110.000 $0.154
1988 $0.080 111.500 $0.154
1989 $0.082 114.700 $0.153
1990 $0.084 117.400 $0.154
1991 $0.087 121.800 $0.153
1992 $0.088 124.200 $0.152
1993 $0.092 126.700 $0.156
1994 $0.092 126.700 $0.156
1995 $0.094 129.600 $0.156
1996 $0.094 131.800 $0.153
1997 $0.094 132.500 $0.152
1998 $0.087 127.400 $0.147
1999 $0.086 126.500 $0.146
2000 $0.087 128.500 $0.145
2001 $0.092 137.800 $0.143
2002 $0.091 136.200 $0.143
2003 $0.093 139.500 $0.143
2004 $0.094 142.100 $0.142
2005 $0.100 150.800 $0.142
2006 $0.112 169.200 $0.142
2007 $0.117 175.825 $0.143
2008 $0.123 187.146 $0.141
2009 $0.127 192.712 $0.141
2010 $0.128 193.095 $0.142
2011 $0.130 196.737 $0.142
2012 $0.130 196.630 $0.142
2013 $0.132 200.750 $0.141
2014 $0.137 208.020 $0.141
2015 $0.138 209.191 $0.142
2016 $0.135 206.983 $0.140
2017 $0.138 211.437 $0.140
2018 $0.136 212.932 $0.137
2019 $0.136 213.362 $0.137
2020 $0.135 214.615 $0.135

*Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Electricity per kWh in U.S. city average, average price, not seasonally adjusted. CPI Average Price Data.

**Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Electricity in U.S. city average, all urban consumers, not seasonally adjusted. CPI-All Urban Consumers.

Electricity in the CPI

Electricity is one of the components watched by the BLS for inflation and a part of its Consumer Price Index (CPI). While electricity rates are more stable than prices for companion items like gasoline and fuel oil, the category falls under the BLS’s main "Energy index." Therefore, although electricity costs are used along with many other goods and services in measuring overall inflation, they are completely discounted in calculating core inflation rates.

How are electricity prices affected by inflation? Less so than many other goods and services purchased by American consumers. As an example, the cost of electricity climbed from an average of 8.1 cents per kilowatt hour in 1985 to 13.5 cents in 2020, marking a 66.7% rate of increase in 35 years. That’s a sizable gain but, interestingly, plugging 8.1 cents and the two years into this site’s Inflation Calculator finds that electricity prices during the time increased slower than the rate of overall inflation. The often-reported overall inflation rate is calculated from measuring pricing changes over thousands of items — not just electricity rates. Overall inflation places 8.1 cents in 1985 at 19 cents in 2020 for a 140.5% rate increase.

How to Adjust Electricity Prices for Inflation

In calculating electricity prices for inflation adjustment, we’ll use an example that shows how to adjust them from 1979 to 2020. First, consider these facts which are shown in the table above:

  • The average price for Electricity in 1979 was $0.050 per kilowatt hour.
  • The annual average CPI for Electricity in 1978 was 65.600.
  • The annual average CPI for Electricity in 2020 was 214.615.

The following formula shows how to adjust gasoline for inflation:

1979 Electricity Price x (2020 CPI for Electricity / 1979 CPI for Electricity) = Adjusted Electricity Price in 2020 Dollars

Using the actual numbers:

$0.0503 x (214.615/65.600) = 16.4 cents per kWh