Eight years ago, the average European’s electricity bill was more than 80 percent higher than the average American’s, and the intervening years haven’t been any kinder for our friends across the Atlantic, who now pay, on average, more than double what we do, for their power. The chart above tracks these prices run amok by showing percentage changes in the average electricity bill in both America and Europe since 2006. The EIA explains those diverging lines:
Regulatory structures—including taxes and other user fees, investment in renewable energy technologies, and the mix and cost of fuels—all influence electricity prices…EU countries taxed residential electricity rates at an average of 31% in 2013, up from an average of 23% in 2006. These values vary greatly by country, with tax ratess in 2013 as low as 5% in the United Kingdom (UK) and up to 57% in Denmark.
Germany pays, on average, the second highest electricity rates in Europe, and add-on taxes, including renewable energy surcharges aimed at funding the country’s extensive and expensive green subsidy scheme, constitute roughly half of its bills. But that’s not the only thing that accounts for Europe’s high prices; the EIA points to booming American natural gas supplies as a key factor in keeping prices down:
Natural gas has accounted for an increasing share of U.S. generation as domestic natural gas production increases have allowed for a greater supply to be available at relatively low cost…From 2006 to 2013, prices for natural gas at the main trading hubs in the UK and Germany increased by more than a third, while prices at the U.S. benchmark Henry Hub decreased by 45%.
High electricity rates are all kinds of trouble: they act as a sort of regressive tax, felt most keenly by the poor, and provide a strong incentive for energy-intensive industries to consider relocating. In that respect, Europe provides a handy foil for the extraordinary shale boom here in America, and for the myriad benefits that renaissance is providing.