This is your complete guide to energy rates by state. Did you know that the cost of electricity varies by the minute? The methods used to calculate your energy bill change drastically depending on a number of variables. From the weather to the location to market type, each state calculates how much to charge you differently, and the cost of electricity by state is vastly different! Understanding the differences between state electric rates can make all the difference for your monthly budget. The different electric power rates by state can make an entire difference in the desirability of settling in a state or even alter how you view energy consumption!
If you’re ready to learn all about the different energy rates by state, read on!
Here at The Energy Professor, we want to give you the information you need to not only save money on your energy bill but to also become more energy efficient. We hope find this post helpful! And makes it easier for you to know more about energy rates by state. Be sure to also check out our one of a kind energy savings calculator!
Energy Rates by State 2024
2021 was a big year for electricity and prices rose significantly for consumers as the cost of fossil fuel generation has skyrocketed. Becoming aware of the average utility rate by state and understanding your electric bill will help exponentially as electricity rates continue to rise. Each state has a variation of costs that go into what sets the utility prices by state, but unfortunately, as national energy costs rise, so will individual state costs.
Which State Has the Cheapest Electricity?
- Idaho – 08.17 cents/kWh
The overall average electricity cost per state in 2021 was 13.72 cents/kWh for residential electricity consumers and has been the highest on record! We can use that number as a good baseline when we compare the states with the highest and lowest average energy rates.
Utility Prices by State – Why Do Electricity Rates by State Vary?
So, you’re comparing average electric rates by state and wondering why your electricity cost might be higher. Your utility bill is dependent on where you live both within and across states. But, to understand why this is the case, you must first understand how the electricity market works.
One big difference between the states is whether or not your market is regulated or deregulated.
Average kWh Cost by Sate – Deregulated vs Regulated Energy Markets
A deregulated market gives the consumer the choice of choosing their electricity company. What this does is create competition between electric suppliers to drive down the price of electricity. A deregulated state electricity market can be beneficial for those who like a lot of options.
A regulated state gives its consumers a limited number of electric companies to choose from (some states only have one option). However, a deregulated market does not always amount to a cheap electric bill but can explain why energy prices by state differ.
Energy Deregulated States in the USA
- New Hampshire
- New Jersey
- New York
- Rhode Island
- Washington D.C.
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Electric Rates by State – When Your Utility Bill Mysteriously Goes Up
The price of electricity by state in 2024, is variable for many reasons, and a lot of those are out of our control. Some states boast incredibly low rates today after paying the highest rates in the country just a few years ago. This is due to a state relying on a system with high fluctuation. Depending on resources, some states are more prone to price variation, while others experience little to no change.
What Affects the Price of Natural Gas?
- Natural gas prices for the most part are a reaction of supply and demand. There are limited short-term alternatives to natural gas as a fuel. So for generating electricity during periods of high demand, customers can see significant price changes. This is also true when supply is in demand over a short period of time during extreme weather.
Each state has its unique service needs depending on weather, population, geography, location, supply vs demand, etc. For example, a state with a large population might charge more per Kilowatt-hour (kWh) during certain periods of the day or year, when usage is higher. That’s why if you live in California, New York, or Florida, your average cost of electricity might be more than someone who lives in Vermont.
Kilowatt Cost Per State – Does Weather Affect Electricity Price Per State?
Electricity usage by state can be heavily influenced by your local climate and seasonal changes. Geographic location and weather are the number one causes of variation. Southern states have higher electricity bills during the summer, while Northern states have higher bills during the winter. States with erratic weather conditions however can witness multiple spikes and drops from month to month all year.
Natural Disaster kWh by State Changes
- Not only can climate affect weather, like hotter and colder months, but extreme weather events also have an impact on electric power rates by state. The major winter storm in Texas in 2021 led to many different energy disruptions and outages. These weather events can put constraints on the transportation of natural gas for power generation and many wind turbines froze, which means higher state electricity.
Fluctuation in pricing could additionally be a result of energy supply. A state with frequent spikes in the electricity bill might be dependent on the price of oil or natural gas, which changes frequently. These variables interact with each other differently depending on legislation and culture. Electricity rates in the United States can be heavily influenced by the laws we make and the kind of energy sources we choose!
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How Does the Energy Market Look in Your State? – Average Price per kWh by State
To understand why your electric bill looks the way it does, look at what kind of energy your state supplies and the market it supplies to. What kind of business stimulates your state’s economy? To figure out why the price of electricity by state varies, take a look at your own state’s economy. States with a high number of businesses, factories, and manufacturing centers rank higher on the average kWh cost of electricity used. Businesses use more electricity than residential households, especially industrial and commercial buildings.
Factors that determine average monthly cost of utilities by state
- Variations in electricity demand
- Availability of fossil fuels/energy sources
- Fuel costs
- Power plant availability
- Deregulated or regulated energy markets
In some markets, businesses have access to deregulated markets while residents use a regulated market. This might seem unfair to residents, but a selectively competitive market makes a huge difference in overall costs. Energy rates by state are directly influenced by whether or not your energy market is regulated or not.
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Does Renewable Energy Change the Cost of Electricity Per kWh by State?
The cost per kWh by state can see some influence by the political and economic benefits of green energy. States that use wind, solar, and other types of green energy rank lower on the national price per kWh average cost. If you live in an area with a high population density (high demand), green energy options can drastically lower your energy bill. Energy culture has a huge impact on what kind of energy is used in your state, as well as how the market is regulated and how the energy sector treats you.
What is the Cost Per kWh for Renewable Energy Sources?
- Solar power has an average cost of 0.06 cents to 0.08 cents per kWh. While wind energy can have an average of less than 0.05 cents per kWh.
Depending on your state’s politics, residents might be rewarded for going green. Other states might penalize residents trying to limit their reliance on fossil fuels, nuclear power plants, and natural gas. There are states where it is illegal to be off-grid and states that offer tax breaks for residents pulling from their own privately owned green energy.
The above variables affect the cost of electricity per kWh by state, but each state’s relationship with its consumers is unique. While consumption costs are influenced by the factors discussed above, costs are not always a direct result of them.
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Cost of Electricity By State: What State has the Highest Electric Rates?
There are many factors as to why the average utility rates by states would be higher in some than others. The most common reasons why are the availability of power plants and fuels, the local fuel cost, and the state pricing regulations. So, how do you know if your electricity bill is right for you? Educate yourself. Be in the know about your energy consumption habits and how they relate to your bill. Being aware of what you should be paying will tip you off when you are paying too much.
Highest Electric Rates by State 2024
- Hawaii – 30.31 cents/kWh
- Alaska – 20.02 cents/kWh
So far, for 2024, Hawaii comes in first as the state with the highest energy rates by state, with Alaska coming in as 2nd. As stated by the EIA, for January 2024 the average electricity cost per state (cents per kilowatt-hour) for the two highest states were Hawaii and Alaska.
Other states with high electricity rates for January 2024 are:
- New York – 23.06 cents/kWh
- Massachusetts – 23.06 cents/kWh
- Connecticut – 20.29 cents/kWh
- California – 19.65 cents/kWh
All these states have their unique reasons for their exceptionally high rates, but let’s take a closer look at Hawaii.
Both Hawaii and Alaska’s geographical locations contribute immensely to their electricity challenges. About half of the Hawaiian state electricity bill is made up of the cost of purchasing power for the island’s generators.
Unlike states on the mainland, Hawaii does not have the option of drawing on nearby power-generating facilities. This unique state’s isolated location means it requires reserve power and generating capability in the event of a problem. Because of their geographical location and access to power, Hawaii has the highest electricity rates per state.
What State has the Lowest Electricity Rates 2024?
Each state has reasons for its specific market specifications, but there are hints as to which kind of state could be more lucrative for you. As you can see, the states mentioned below are generally located in the Midwest. This is because the Midwestern States have a lower population density and a lot of wide-open space. States with large areas of unpopulated land rank high in self-reliance and often have lower electricity cost per state. In other words, a high supply and low demand. This supply vs demand relationship is typically accompanied by a deregulated market and wind or solar farms.
Cheapest states for electricity 2024
- Idaho – 8.17 cents/kWh
- Wyoming – 8.25 cents/kWh
- Utah – 8.34 cents/kWh
Other states with cheapest electricity include:
- Oklahoma – 8.52 cents/kWh
- Nevada – 8.58 cents/kWh
- North Dakota – 8.65 cents/kWh
- Washington – 8.75 cents/kWh
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Weather and Politics: The Case of Oklahoma
As it goes for energy costs by state, Oklahoma ranked 2nd highest in residential electrical costs on average in 2021. As one of the states usually ranking lowest in rates, this came as a shock to consumers.
A state relying heavily on natural gas, the local government was forced to make huge fuel cost adjustments due to weather conditions. This is why energy rates by state can change so drastically depending on what fuel source they use. One of the biggest ice storms in Oklahoma’s history spiked the cost of natural gas, leaving residents with unaffordable utility bills.
The February freeze shot the price of natural gas from $4.16 to $1,192.86 within 5 days. Oklahoma gas companies are used to having enough natural gas to export to other states, but the ice storm left the natural gas industry stranded and unable to provide for the local market
Oklahoma’s politicians are now in a position to either protect their citizens or leave them with the bill. A deregulated free market should entail no protection for residents in situations like these.
Depending on politics, residents might have to pay for the highest electricity bills in history. Electric prices per state can solely depend on the political decisions of their elected officials. All this while natural gas suppliers turn a profit once their natural gas reserves are defrosted. The case of Oklahoma is a perfect example of why it’s important to keep yourself protected.
Energy Rates by State 2024 FAQ
Q: Which US State has the cheapest electricity?
A: Idaho has the cheapest electricity at 8.17 cents/kWh.
Q: Which states have the cheapest electricity?
A: For 2024, Nebraska, North Dakota, Idaho, Washington, Wyoming, Arkansas and Utah.
Q: What states have regulated energy?
A: The states that have a regulated energy market are –Alabama, Alaska, Arizona, Arkansas, Hawaii, Idaho, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin.
Q: Which state has the cleanest power?
A: Out of all US states, Vermont takes the cake in clean energy.
Q: What is considered natural gas?
A: Natural gas is just another term for a fossil fuel. This type of energy source is naturally occurring and made up of an odorless mixture of hydrocarbons. The largest component of natural gas is methane.
Do you Need Cheaper Electricity?
If you’ve taken the time to understand the information on your bill and discovered you’re paying more than you’d like for your electricity, have you looked around for a cheaper deal? The Energy Professor has a wealth of information on ways to save on your utilities, including details of top deals that could significantly reduce your monthly or quarterly electricity bills. We hope you found this article helpful! If you are looking for ways to increase energy efficiency and sustainability in your home be sure to take a look at all of the latest renewable energy options in your area. The Energy Professor helps residential and small business owners find qualified energy suppliers in New York, New Jersey, Pennsylvania, Texas, Ohio, Maryland, Illinois, and Massachusetts!