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Historic Increase in Electricity Prices

The average retail price of electricity rose 9 percent in 2006, the the largest jump in 25 years.

The average retail price of electricity rose 9 percent in 2006, the largest jump in 25 years, the government said Monday. This news won't come as a surprise to data center operators, who consume an estimated 1.5 percent of all power in the United States and are acutely focused on power costs. But it reinforces the importance of power costs as a driver in data center design and site location decisions, and why there's so much talk about green data centers. The government's Energy Information Administration said the average price increase was the largest since 1981.

If you think power prices will come down anytime soon, check out coverage of last week's report on the state of the U.S. power grid. The North American Electric Reliability Council (NERC) said that the nation's electric infrastructure is not keeping up with demand, and additional generation from new wind, solar and nuclear projects will further strain the grid. The demand for power in summer is expected to increase more than 135,000 megawatts nationally in the next 10 years, an 18 percent overall increase. New power plant construction will add 77,000 megawatts, which helps met demand but will inevitably find its way into power bills as some electric companies pass their costs on to their customers.