U.S. sees 9.8% spike in '09 electric bills

IEA: Why gas is so expensive

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NEW YORK (CNNMoney.com) -- Americans may face dramatically higher electric bills next year, according to a government report released Tuesday.

The U.S. Energy Information Administration forecast that electricity prices will climb an average of 9.8% in 2009. Only a month ago, the agency was forecasting a 3.6% increase for next year.

The new forecast projects that electricity prices will climb 5.2% in 2008, an increase of nearly 1.5 times the projected 3.7% increase that was forecast in June.

"Within the past few weeks, a number of utilities have requested permission from state regulators to raise electricity rates in response to rapidly increasing delivered fuel costs for power generation," EIA wrote. "It is likely that most other utilities will soon need to pass through these increased costs to retail customers as well."

The increase in price of natural gas is a main factor in the projected jump in electricity prices, according to Tancred Lidderdale, an EIA economist. He said natural gas makes up about 20% of the price of electricity.

The EIA reports that many utilities have requested permission from state regulators to raise electricity rates in response to the increased cost of generating power.