In my recent article entitled, “Renewables raise electricity prices, University of Chicago economists find,” two University of Chicago academics estimated that electricity price rises, due to Renewable Portfolio Standards (RPS), were 11% over 7 years and 17% over 12 years.
The Chicago academics observed that there were no significant electricity policy changes, nor inflationary electricity trends, prior to the early 2000s, except RPS in a majority of states including Minnesota.
They also found that the inflection point, when renewables inflation took off, was the year 2002. The official federal statistics back this up, but at far higher rates of electricity inflation, that even “Blind Freddy” can see in the seven charts to follow.
Bureau of Labor Statistics (BLS)
The official federal statistics in the following two charts are sourced from the Consumer Price Index (CPI) published by the Bureau of Labor Statistics (BLS).
Chart 1 below shows electricity CPI taking off from 2002 through to 2024 for the Twin Cities (MSP), Midwest (MW) and the US, with MSP separating upwards from 2008. Minnesota’s renewables push started in 2001 (i.e. “voluntary” REO) and 2007 (i.e. mandatory RES). Other highlights include:
- MSP: inflation of 84% for 1978-2001 and 131% for 2002-2024; volatility of 19% for 1978-2001 and 23% for 2002-2024; and misery (inflation plus volatility) of 103% for 1978-2001 and 154% for 2002-2024.
- MW: inflation of 94% for 1978-2001 and 92% for 2002-2024; volatility of 17% for 1978-2001 and 19% for 2002-2024; and misery of 111% for 1978-2001 and 111% for 2002-2024.
- US: inflation of 126% for 1978-2001 and 105% for 2002-2024; volatility of 19% for 1978-2001 and 19% for 2002-2024; and misery of 145% for 1978-2001 and 124% for 2002-2024.
Chart 2 also below shows electricity CPI for the Twin Cities in between All Items (AI) CPI and Natural Gas (NG) CPI from 1987 until 2002, with NG overtaking it from 2003 to 2008, and AI being overtaken by it from 2013 to 2014. Other highlights include:
- All Items CPI: inflation of 178% for 1978-2001 and 67% for 2002-2024; volatility of 26% for 1978-2001 and 15% for 2002-2024; and misery of 204% for 1978-2001 and 82% for 2002-2024.
- Electricity CPI: inflation of 84% for 1978-2001 and 131% for 2002-2024; volatility of 19% for 1978-2001 and 23% for 2002-2024; and misery of 103% for 1978-2001 and 154% for 2002-2024.
- Natural Gas CPI: inflation of 186% for 1978-2001 and 60% for 2002-2024; volatility of 23% for 1978-2001 and 20% for 2002-2024; and misery of 209% for 1978-2001 and 81% for 2002-2024.
Chart 1
Chart 2
Energy Information Administration (EIA)
The official federal statistics in the following three charts are sourced from electricity and natural gas prices published by the Energy Information Administration (EIA), the former originally in cents per kiloWatt-hours (¢/kWh), but then converted to dollars per million British thermal units ($/MMBtu), so as to be compared with the latter.
Chart 3 below shows Minnesota (MN) average electricity prices (AEP) in ¢/kWh steadily increasing from 2002 to 2025, for residential, commercial and industrial customers. Other highlights include:
- MN Residential AEP: inflation of 81% for 1978-2001 and 106% for 2002-2024; volatility of 13% for 1978-2001 and 21% for 2002-2024; and misery of 94% for 1978-2001 and 127% for 2002-2024.
- MN Commercial AEP: inflation of 49% for 1978-2001 and 107% for 2002-2024; volatility of 11% for 1978-2001 and 22% for 2002-2024; and misery of 60% for 1978-2001 and 128% for 2002-2024.
- MN Industrial AEP: inflation of 41% for 1978-2001 and 125% for 2002-2024; volatility of 9% for 1978-2001 and 22% for 2002-2024; and misery of 50% for 1978-2001 and 147% for 2002-2024.
Charts 4 also below shows the gap between MN AEP and MN average natural gas prices (ANGP) in $/MMBtu steadily increasing from 2002 to 2025. Chart 5 further below shows the average energy prices ratio (AEPR) of these two spasmodically increasing from 2008 to 2025. Other highlights include:
- MN AEP: inflation of 63% for 1978-2001 and 113% for 2002-2024; volatility of 11% for 1978-2001 and 22% for 2002-2024; and misery of 74% for 1978-2001 and 135% for 2002-2024.
- MN ANGP: inflation of 223% for 1978-2001 and 8% for 2002-2024; volatility of 23% for 1978-2001 and 23% for 2002-2024; and misery of 246% for 1978-2001 and 30% for 2002-2024.
- MN AEPR: inflation of -49% for 1978-2001 and 98% for 2002-2024; volatility of 15% for 1978-2001 and 34% for 2002-2024; and misery of -34% for 1978-2001 and 132% for 2002-2024.
Chart 3
Chart 4
Chart 5
Electricity Minus Inflation (EMI)
The official federal statistics in the following two charts are also sourced from CPI published by BLS.
Chart 6 below shows Electricity Minus Inflation (EMI) as an index (I = 100), which is electricity CPI minus all items CPI, mostly declining from 1978 to 2002, before largely increasing from 2003 to 2024. EMI is also negative from 1980 to 2010, before turning positive from 2011 to 2024. Declining or negative EMI is good, and increasing or positive EMI is bad.
Chart 7 further below shows EMI as an annual change (%). Five years between 1978 and 2001 are -5% or less, with only one year like that between 2002 and 2024 (i.e. 2019). Four years between 2002 and 2024 are +5% or more, with zero years like that between 1978 and 2001.
Other highlights include:
- EMI (I = 100): average of -9.3 for 1978-2001 and -1.0 for 2002-2024; median of -6.4 for 1978-2001 and 5.3 for 2002-2024; maximum of 13.0 for 1978-2001 and 26.5 for 2002-2024; minimum of -38.4 for 1978-2001 and -40.7 for 2002-2024; standard deviation of 11.8 for 1978-2001 and 21.9 for 2002-2024; misery (median plus standard deviation) of 5.5 for 1978-2001 and 27.1 for 2002-2024.
- EMI (Change %): average of -1.9% for 1978-2001 and 1.3% for 2002-2024; median of -1.6% for 1978-2001 and 1.4% for 2002-2024; maximum of 4.4% for 1978-2001 and 9.1% for 2002-2024; minimum of -17.4% for 1978-2001 and -5.0% for 2002-2024; standard deviation of 5.1% for 1978-2001 and 3.4% for 2002-2024; misery of 3.5% for 1978-2001 and 4.8% for 2002-2024.
Chart 6
Chart 7
Conclusion
In summary, the Minnesota (MN) and Twin Cities (MSP) highlights from above include:
- MSP Electricity Consumer Price Index (CPI): inflation of 131% for 2002-2024; volatility of 23% for 2002-2024; and misery (inflation plus volatility) of 154% for 2002-2024.
- MN Average Electricity Prices (AEP): inflation of 113% for 2002-2024; volatility of 22% for 2002-2024; and misery of 135% for 2002-2024.
- MSP Electricity Minus Inflation (EMI): average of 1.3% for 2002-2024; median of 1.4% for 2002-2024; maximum of 9.1% for 2002-2024; minimum of -5.0% for 2002-2024 (i.e. 2019); standard deviation of 3.4% for 2002-2024; misery (median plus standard deviation) of 4.8% for 2002-2024.
Note that the Chicago academics estimated renewables-driven electricity inflation of 11% over 7 years and 17% over 12 years. The annual EMI average and median are very consistent with those two figures, being 9.1% to 9.8% and 15.6% to 16.8% respectively.
In conclusion, electricity prices inflation in Minnesota and the Twin Cities started to take off right after wind and solar renewables were incentivised from 2001 and then mandated from 2007. This is not only self-evident over time by looking at electricity alone, but even more so when compared to CPI, generally or natural gas in particular, as well as the rest of the Midwest or US. Regarding the latter two, MN’s and MSP’s electricity inflation is far worse.