Most Expensive and Cheapest Electricity By State
When you turn on your living room lights or your electric stove, you are purchasing a product--electricity. Like other products, electricity costs different amounts in different places. State by state, there are differences in electricity prices. The price is always expressed in units: while gas for your car is by the gallon and ground turkey is by the pound, electricity comes in kilowatt hours, kWh.
In 2018, the average price per kWh in the U.S. is 13.1 cents per kWh. As you’ll see below, it can vary quite a bit; we’ll explain why that is after we rank the cost of electricity by state.
Most Expensive Electricity by State
Here are the ten states with the most and least expensive electric rates for residential consumers, according to the U.S. Energy Information Association. Prices are in cents per kWh.
New York 19.4
Rhode Island 18.2
As you can see, the tenth-least expensive state, Oregon, isn’t far from the above-mentioned national average of 13.1 cents, and this shows that much of the nation is bunched around that average.
Now, how much does a family end up paying? Well, data from the UIEA tell us that the average U.S. household uses 687 kWh per month. If you multiply that by the average cost of 13.1, you arrive at an average of $116.69 per month. Does that sound familiar?
To dig deeper, the average abode in Hawaii, in 2016, not needing to run the heat a lot, maybe cooking with a grill on the patio, used just 505 kWh per month.
That means that this family, with Hawaii’s high rates, would pay $168.67, much more than the national average, even though they’re conserving energy. Keeping in mind the cost of electricity (along with water, gas, and any other utilities you may pay) is very important when considering a move to a particular area or starting a business there.
Why Are the Costs Different?
Now, above, we mentioned that electricity is a product. It isn’t a product only because there’s someone who controls it and can keep it from the rest of us. You can better appreciate how electricity is a product when you stop to remember it is converted from raw materials—coal, oil, natural gas, even wind, sun or hydro energy require conversion. This means that electricity is a secondary energy source. So, the more it costs in a particular area to produce energy, the more it will cost per kilowatt hour.
In Hawaii, for example, electricity is developed from crude oil, which is expensive there. By contrast, the cost of electricity in Louisiana is low. One of the reasons for this may be that the company that provides energy to the entire state, Entergy Louisiana, owns many power plants, meaning it actually creates energy, rather than purchasing it from another entity.
In short, the more different power plants are involved in creating the energy used by people, the higher the cost per kilowatt hour. The transmission and distribution system, because of the costs to run and maintain it, also plays into the price for a household. Thus, different areas will have different prices caused by variations in these factors.
It’s important to remember that electricity costs more during different seasons and at different times per day. This is called value-optimized pricing, charging more or less for any product based on how valuable it is. People tend to run their air conditioners between 3 P.M. and 7 P.M., and energy companies usually charge more per kWh during this time, and since air conditioner use is highest in summer, they charge more then.
How is the Power Generated?
We’ve listed some of the factors relating to the power grid and how they affect prices.
But one important point is that the method of generating power in the first place definitely impacts the price. A state with one of the lowest prices for electricity is Idaho. That state produces 70 percent of its power through hydroelectric dams. Because hydropower is simple, with limited machinery required, it isn’t very expensive.
As of now, hydropower is the least expensive of the renewable energies. This report gives a comparison, showing that offshore wind is the most expensive of the renewables, while onshore wind rivals hydropower for the lowest cost. It also explains that while coal does remain inexpensive, the gap between it and greener technologies is closing.
Naturally, research and development will lead to ways to produce power less expensively, possibly with hydropower and other clean sources. However, being sure to conserve energy can have a positive impact on the cost, since lower demand will lower costs.