What Inflation Rate Should I Use for the Cost of Electricity? How Much Does Electricity Go Up Each Year?

Unfortunately you can’t just set a budget once and use it for years. The costs of budget items keep changing even if your usage stays the same. As we approach retirement, I keep trying to get a clearer picture of what our costs will be not just for year 1 but for 20-30 years, should we be so lucky. Recently, I decided to check into how much our cost for electricity has been going up each year above the so-called rate of inflation.

What Total Amount Do We Pay Per kWh for Electricity Including the Taxes, Surcharges and Other Costs?

In Ontario, we pay a high rate for home use of electricity. Partly that’s because we’re still paying off all sorts of costs related to setting up and maintaining our nuclear reactors, shutting down our coal-fired generating stations, and paying huge amounts per kWh to people who set up solar arrays.

I took a look at our annual total spending on electricity divided by our total annual usage to see what our historical annual charge per kWh has been.

Year    $/kW         % Change

2015    0.156         6
2014    0.147         7
2013    0.137         7
2012    0.129       24
2011    0.103        -3
2010    0.107      -10
2009    0.119         8
2008    0.111        -6
2007    0.118      -21
2006    0.149         8
2005    0.138         9
2004    0.127         7
2003    0.119      -13
2002    0.137       22
2001    0.112

What Percentage Did Our Electricity Costs Go Up Per Year for the Past 10 Years?

If you look at the chart above, you’ll see it jumps around a lot. That’s because some of the rates were before “time of use” billing. And some years we used less or more electricity depending on the weather. And various government incentives and penalties came on and off.

You can see it’s going to be very difficult to pick a number to use for our rate of inflation. Some years our hydro rate per kWh actually decreased substantially, even though our usage has been fairly constant. That’s because this rate includes all those “non-variable” costs like delivery charges and debt retirement fees.

For planning purposes, I’m going to use 7% for the annual rate of increase in hydro costs. It’s probably wrong but I have to use something!

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What do you use to estimate the increase in the cost of electricity per year in your budget? Have you ever had to cut from other budget categories because your hydro costs rose faster than you expected? Please share your experiences with a comment.

Why Do Oreos Always Go On Sale for Father’s Day?

We don’t buy a huge number of packaged cookies as I like to bake when I’m stressed. (Yes, we do eat a lot of cookies; Yes, if you follow that to its logical conclusion I should get back to my T’ai Chi or change jobs.) When I do buy store cookies, I usually try to choose ones that I can’t make easily at home or the weirdly coloured and textured things my children like best. For years, there were certain high-fat cookies I just wouldn’t buy. However, once a year, I would buy a pack of Oreos for my husband to dunk in milk. I used to get them for his birthday, till the children joined us and I realized that Oreos always go on sale for Father’s Day.

Hiding somewhere in the house right now is a family-size pack of Double Stuf Oreos. They cost $1.88: a considerable cost-saving over the regular price for the large bag of Oreos. But why do the stores consider Oreos a good loss-leader for Father’s Day?

Do most men like icing-filled cookies? Or only men with children? Do they want to have cookies and milk and it’s more socially acceptable if they are Oreos which need to be dunked?

I may never know. What I do know, though, is that if you are trying to save money, buying packaged cookies is usually not the right choice.

Which Is Cheaper? A Box of Those Foil Bags Each Containing One Serving of Cookies or Baking Your Own Batch?

My children succumb to peer pressure sometimes just like normal people’s children. So one day I got asked to get a box of 6 single-serving packs of miniature chocolate chip cookies.

Because it’s my kid we’re talking about, my child had no trouble understanding that I wouldn’t be buying them until they were on at least partial sale. So when they were priced at 2 boxes for $5 I caved and bought one. (You have to watch which store you’re at: At Sobey’s a 2-for-Price is usually the same as a 1-for-Half-that-Price. At Longos, there’s usually fine print that says “or 1 for 2.99” or something similar.)

As I walked home, I read the box. There were 6 packs inside and the boxed weight was 180g. Yikes. For most cookies around here if you pay a $2.50 sale price you get 250-350g of high-caloric junk. Right away you can see these little “lunch bags” of cookies are over-priced.

Some fast math would suggest it’s still cheaper than buying the ingredients to bake, say, chocolate chip cookies. After all, the sale price for a one-batch bag of Chipits was also $2.99 that day.

But, as I remembered, that’s a 350g bag of Chipits.

What Does a Batch of Chocolate Chip Cookies Cost to Bake?

I inherited, unfortunately, a kitchen scale a couple of years ago, so when I got home, I weighed out the 2 cups of flour that would go with the Chipits. Then I weighed the other stuff to make a batch of cookies.

  • 337 g Chipits (yah, sure, YOU never eat a handful out of the bag when stirring the batter: I’m an HONEST Crooks)
  • 214 g flour (that’s my approximate 2 cups. YMMV)
  • 65 g white sugar
  • 130 g brown sugar
  • 155g butter; plus
  • 42g eggs

equals 943 g of ingredients

I’m refusing the weigh the baking soda, salt, vanilla extract and secret ingedient.

So for $2.99 we get about 943 g of chocolate chip cookies.

Rats. You spotted that did you? Sigh. The things I do for this website.

Ok. Here are some more costs:

  • Chocolate chips, on sale, but not the best sale ever, and not as good as a sale on the bulk-size bag, and for Chipits not no-name chips: $2.99
  • Flour $0.50
  • White sugar $0.10
  • Brown sugar $0.30
  • Butter $1.00, plus
  • Eggs $0.50

I’m not adding in the baking soda, salt, vanilla extract and secret ingredient here either. So there.

Ok, the actual retail value is $5.39. So call it $5.50 including the vanilla. You can get this total MUCH lower if you shop the sales carefully.

That’s $5.50 for 943g of cookies.

(You see how much cheaper it would be to make Oatmeal Cinnamon with no chocolate chips, by the way? Or lemon sugar?)

Rats. I guess there’s also some electricity cost for baking them. Although I could make rum balls without an oven….

Let’s lie and say the electricity is $0.50 until I can figure out some easy way to get a real number.

[Ok, I checked and at off-peak rates baking two trays at once, it’s about 13-53 cents, so I’ll stick with this number. The BC Hydro number of 13 cents is probably more accurate. You can optimize oven costs by using an oven already hot from roasting something, etc., too, but that should be in an article on reducing electricity costs.]

That makes it $6 for 943 g of chocolate chip cookies.

That’s about $1.15 for 180 g.

The little foil pouch ones are $2.50 plus HST for 180g.

That means it costs about $1.35 more to buy the ready-made ones.

Saving $1 doesn’t sound like that much until you consider just how many cookies the average children eat in a typical year. Especially when you remember one of those boxes of foil pouches gets you to Wednesday if you have two children. The batch of homemade gets you through three 5-day school weeks for two.

(For best results, bake only a few days of cookies at one time. Shape the rest of the cookie dough into cookies on a baking sheet, freeze them, freezer bag the little unbaked cookies, keep frozen till almost ready to use, thaw the desired number for 15 minutes, then bake as if freshly stirred. Fresher cookies for almost no extra work. Yum!)

Note: I could say the homemade ones taste better. But children don’t always agree: they agree they taste different, but they like both. Just as I actually like KD. I would NEVER call it macaroni and cheese, though, which is an entirely different thing including, among other things, real cheese. The two kinds of cookies are like salmon and tilapia. They both have their own textures, smells and flavours. (And adults usually prefer salmon.)

Does White Sugar Also Go On Sale Every Father’s Day?!

One thing I noticed reading through the flyers to get some item costs is that almost every store has 2 kg of white sugar on sale this week for $1.97. That’s a reasonable price, though not amazing. Does it always come on sale this week? I’ll have to remember to start checking every June. If so, perhaps there are some weird psychological decisions being made in Marketing Land about gifting sweetness to Fathers?

Or maybe it’s just because these first local strawberries tend to be a bit tart?

A Thank You To Readers of Financial Crooks from my Well-Treated Husband

By the way, my husband thanks you for inspiring this article because now he’s getting Oreos AND chocolate chip cookies for Father’s Day. (You didn’t think I’d measure out all of those ingredients and then just put them away did you?!)

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Do you bake to save money? Or just because thumping bread dough keeps you from thumping your boss or co-workers? If you’ve solved the mystery of the Oreo pricing, we’d especially like to hear from you! Please share your incisive insights with a comment.