It doesn’t take a crystal ball to see that the utility rate increases we’ve all experienced over the last few years are likely to continue in 2021 and beyond. At the same time, the trend of adding cumbersome new restrictions on rental properties is growing nationwide.
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Here’s to a happy, profitable and, above all, healthy 2021!
Daniel S. Sharabi
Utility Rates Expected to Rise in 2021
Nationwide, property owners should expect across-the-board utility increases in 2021, with some jurisdictions expected to see double-digit rate hikes. According to a survey from the U.S. Energy Information Administration, the residential electricity price nationwide will increase just under one percent between 2020 and 2021, continuing an upward trend. Rates have gone up six out of the last eight years, according to the EIA.
Natural gas prices are also expected to rise, with international markets willing to pay a higher rate for this U.S.-produced energy source. Domestic demand is also expected to rise, with those areas most impacted by climate change increasing their need for heating and cooling. In fact, cooling devices like fans and air conditioners comprise the largest percentage of residential energy use.
Water rates vary enormously depending on the area, with typical water and sewer rates under $50 a month in cities like Memphis and Phoenix, and over $200 a month in Seattle and San Francisco. But no matter the municipality, over the long-term rates are up substantially from an average of $39 a month in 2001 to $100 in 2018.
Interestingly, demand for water has actually dropped significantly since an all-time high in the 1980s, according to the U.S. Geological Survey. But the aging water and wastewater infrastructure, and the increasing capital and operational costs that drove these rates higher over the last two decades are unlikely to change in the years ahead. That means we can expect to see water rates climb into 2021 and beyond.
Much like water, the underlying issues driving rates up in the waste removal industry are likely to keep rates high moving forward. The biggest issue is that China is no longer interested in purchasing much of our scrap, turning a former profit center into an increasingly expensive endeavor.
With recycling stacking up, there are higher employment costs since more people are needed to separate the dwindling percentage of still-valuable reusable materials from the rest. This while the waste industry is seeing an active labor shortage, which means waste haulers need to provide higher pay and better benefits to bring in drivers and other staff. As these expenses rise at the same time that recyclable profits plummet, expect waste rates to rise with more fees and higher prices for recycling in particular.