Electricity Rates By State: Compare The Cheapest Electric Power Rates

Cost of Electricity by State

When it comes to understanding your electricity rate, it can be easy to become complacent if you’ve lived in the same home and used the same utility company for a while. But complacency can result in us not receiving the best deal or living in a way that’s best for our planet.

You, like many others, may have questions about how to get the most out of your energy supplier and whether you’re living in a state with particularly expensive energy rates. Read on to find out the answers to these questions and learn about energy rates across the country.

Does where you live affect your electricity rates?

The amount you pay for your electricity bill can depend on several factors such as the demand for energy, the amount of energy you use, where you live, the time of year, and any market disruptions such as the change in coal or oil prices.

Your location can have a particular impact on your electricity bill, and not in the way you might expect. For example, while northern states like Wisconsin can be subject to heavy snowfall, it’s actually Louisiana with the highest energy usage. This is because not only do Louisianans need to use their air conditioning for a significant portion of the year to stay comfortable, but their homes are typically older and so aren’t as energy efficient.

However, the rates in each state don’t reflect how much energy their residents actually use. For example, Hawaii, which has a low energy use, has the highest average rate at 30.55 cents per kWh. Meanwhile, Louisiana, which we just discussed having a high energy use, has the lowest cost, at just 7.01 cents per kWh.

Why do electric rates vary by state?

Energy rates can vary from state to state and even within states themselves. They can also differ month to month and during peak and off-peak times of day. If you use the majority of your energy at the same time of day as others do, you’ll likely have to pay more. But, if you’re more of a night owl and use most of your energy between 11pm and 6am, say, your average rate will likely be lower since there will be less demand on the energy itself.

Regulated vs. deregulated states

Deregulation was introduced to make the energy market more competitive and give consumers a choice about how much they pay for their energy. If you live in a deregulated state, you can shop around and choose which tariff you want to be on.

For example, Texas offers some of the lowest rates in the country, largely because it is deregulated and there is a lot of competition driving down prices. However, many north eastern states haven’t seen much improvement from deregulation and still pay some of the country's highest rates.

Ultimately, the rate in your state will differ from another due to your personal style of energy consumption (when you use the most), the time of year, the weather conditions, and whether you live in a deregulated market and how competitive that market is.

Which states offer the lowest residential electricity rates?

People living in Louisiana are currently paying the least for their electricity bills. The average home in Louisiana pays just 9.41 cents per kilowatt-hour. This rate is much lower than the national average, which is 13.19 cents per kilowatt-hour.

Surprisingly, Washington follows at 9.92 cents as of November 2020, then Oklahoma at 10.29 cents per kWh. Idaho (10.39 cents) and Arkansas (10.51 cents) are in 4th and 5th place, though this changes from month to month.

Which states charge the most for residential electricity rates?

As of November 2020, Hawaiian residents pay the highest electricity rate, with an average price of 28.87 cents per kWh. The second highest is Alaska, at 23.75 cents. Connecticut (22.13 cents), Rhode Island (22.13 cents), and Massachusetts (21.68 cents) follow.

Residential Electricity Rates by State

Below, you’ll find a table of each US state, in alphabetical order, showing the average rate as of August 2020.

State & August 2020 Rate (cents per kWh)

• Alabama - 12.76
• Alaska - 23.75
• Arizona - 12.37
• Arkansas - 10.51
• California - 20.77
• Colorado - 12.84
• Connecticut - 22.13
• Delaware - 12.15
• Florida - 11.61
• Georgia - 12.89
• Hawaii - 28.87
• Idaho - 10.39
• Illinois - 12.33
• Indiana - 12.32
• Iowa - 14.62
• Kansas - 12.98
• Kentucky - 10.67
• Louisiana - 9.41
• Maine - 16.82
• Maryland - 12.48
• Massachusetts - 21.68
• Michigan - 16.60
• Minnesota - 14.16
• Mississippi - 10.78
• Missouri - 12.40
• Montana - 11.94
• Nebraska - 11.94
• Nevada - 10.79
• New Hampshire - 18.28
• New Jersey - 16.48
• New Mexico - 13.97
• New York - 18.41
• North Carolina - 11.56
• North Dakota - 11.91
• Ohio - 12.06
• Oklahoma - 10.29
• Oregon - 11.29
• Pennsylvania - 13.25
• Rhode Island - 22.13
• South Carolina - 12.53
• South Dakota - 12.71
• Tennessee - 10.51
• Texas - 11.74
• Utah - 11.32
• Vermont - 19.17
• Virginia - 12.34
• Washington - 9.92
• West Virginia - 11.73
• Wisconsin - 14.72
• Wyoming - 11.72

How is energy generated?

Energy is generated and harnessed by way of several methods. Some are available infinitely and will never run out; natural resources like wind and sunshine will never deplete. These are known as renewable energy sources and are typically less harmful to the environment.

Wind

Modern wind turbines capture kinetic energy from the wind, generating electricity. We can harness utility-scale wind power, which is sent to the grid and purchased by utility companies. “Small” wind powers individual homes, and offshore wind farms are used to power any larger industrial or public buildings. These are typically located on the continental shelf and can be larger because of how far away they are from land and people. Another benefit of offshore wind farms is that there’s essentially no wildlife for the turbines to interfere with.

Solar

Solar energy is the energy we harness from sunlight. Through a process called the photovoltaic effect, we convert energy from the sun’s rays into electricity. This energy can power our homes, cars, and local buildings. Solar power has become far more accessible in recent years, with many residents installing solar panels on their own roofs as a way of powering their homes independently.

Fossil fuels

Fossil fuels are ancient and were formed over millions of years. These fuels come from the ancient remains of plants and animals that roamed the earth millions of years ago. Fossil fuels include natural gas, coal, petrol, oil shales, tar sands, and heavy oils. Currently, we rely heavily on fossil fuels to power our businesses, cars, homes, and public buildings.

Petroleum makes up about 37% of America’s energy usage, but this must change soon as fossil fuels account for devastating amounts of pollution, land degradation, water pollution, and fragmented wildlife habitats. On top of all of this, these resources will run out one day, so we must transition to a more balanced reliance on renewables and nonrenewables as soon as possible.

Fossil fuels create energy by being burned in order to heat water and create steam that turns generators. In a vehicle, for example, energy is created through tiny “explosions,” which forces a piston to move.

Nuclear

Nuclear energy harnesses the heat provided by nuclear fission to produce steam, which turns generators.

Biomass

Similarly, biomass is burned to produce heat to create steam, and thus turn a generator.

Did electricity rates go up in 2022?

The most recent data from the Energy Information Administration (EIA)  shows that in May 2022, the average household energy price in the United States was 14.92 cents per kilowatt-hour (kWh). In comparison to the prior year, the national average climbed by 7.4 percent. During the hotter-than-normal summer, prices may seem to have risen higher than they did. On the positive side, electricity sales in the U.S. are expected to decrease by 0.3 percent in 2023. 

Natural gas costs are rising more quickly than they have in the past few years due to a decrease in Russian supplies to Europe and Asia, which is the main driver of the increase in electricity bills. In addition, there is a greater need for American natural gas, both locally and overseas, and prices are rising as a result. So we can anticipate further increases in electric rates, but it is important to keep in mind that certain circumstances led to this most recent jump. 

What uses the most electricity in a house?

Every year, there are more and more appliances in homes that utilize electricity, which can have a disastrous impact on your electricity bill and negative environmental effects. The top contenders in the home for using the most energy are a select few items, such as the HVAC system, washer, and dryer. The average American home uses 46 percent of its energy on its HVAC system, making it an energy-hungry system. 

Home appliances consume about 13 percent of the total energy used in a typical home. Washing machines, dryers, refrigerators, ovens, stoves, dishwashers, lighting, and media devices are among those second to the heating and cooling system. Of course, you do not have to give up any of these items, but if you could cut back or switch to solar power to provide your electricity, you could save a ton of money and save the environment at the same time. 

How many kWh per day is normal?

According to the EIA, the average annual energy use for a U.S. residential home user is around 10,500-kilowatt hours (kWh), or 867 kWh on average each month. Accordingly, the average household uses 28.9 kWh of electricity every day (867 kWh per month). 

Why is electricity cheaper at night?

Depending on the time of day you consume electricity, some energy providers offer time-of-use plans that charge you differently. For example, off-peak hours have cheaper rates, whereas peak hours have more expensive rates. In addition, although each service provider has different off-peak and peak times, off-peak times are typically at night or in the middle of the day, while peak times are in the mornings and evenings. 

Doing chores during off-peak hours could result in a considerable reduction in your energy cost if your energy provider offers a lower rate then. For instance, running appliances at night when energy is less expensive could reduce your typical electricity cost. Check with your electricity company to find out your peak and off-peak hours. 

What can you do to save more electricity?

To start, check to see how old your appliances and HVAC systems are, as older models take much more energy to run. Heating systems older than 15 to 20 years are typically inefficient. Additionally, cooling systems older than 10 years are candidates for replacement due to current developments in the air-conditioning industry. You can also replace your current thermostat with a programmable model with advanced controls, which will consume less energy. 

Next, add a layer of insulation to your attic for more energy efficiency. The attic is one of the most typical areas for heat to escape as it rises. Next, adding ceiling fans improves air circulation when used in conjunction with the HVAC system. Also, be sure to check your water systems for efficiency. The final step is to upgrade lighting by converting to LED or CFL bulbs to use less energy and lower your bills.

Is clean energy more expensive?

Clean energy offers comparable prices to non-renewable energy, with prices decreasing every year. In contrast to conventional energy sources, renewable energy is more cost-effective and effective as a source of power in the majority of developed nations.

Customers' desire will encourage the government to adopt renewable energy sources. Similar to how streaming media has quickly replaced cable television, landlines have been displaced by cell phones. Demand will force the government to make reforms in favor of renewable energy as more affordable options become available and more people are informed about their advantages. 

Like anything else, costs for newer items are higher than for those that have been around for a while. Initially pricey, renewable energy sources are now becoming more affordable as they gain popularity, with price drops of up to 62 percent. The costs for wind and solar energy have both decreased by 9 to 13 percent. As a result of historically low pricing, moving to renewable energy sources is a real possibility.

Is it cheaper to switch to clean energy?

While prices are comparable to non-renewable energy, the prices are slightly higher, as the infrastructure still needs work and expansion. However, the cost of renewable energy sources has been declining as they are employed more frequently. In actuality, they have decreased by as much as 62 percent. Additionally, renewable energy sources are becoming increasingly well-liked and are beginning to seem like viable alternatives to conventional energy sources.

Although they are currently slightly more expensive, major savings are in the not-to-distant future as the U.S. works toward the goal of fully renewable sources by 2050. All of today's electrical sources, including those utilized in homes, are designed for how things are done right now. Therefore, new systems will need to be established in order to use renewable energy, which will initially increase consumer costs but decrease with the market and governmental assistance. 

However, you can also generate money from energy corporations by selling electricity from renewable sources to the grid. If you can afford the initial cost of solar, geothermal, and other renewable infrastructure in your home, they will pay for themselves in a few years. Furthermore, employing green energy eventually improves everyone's health and the health of plants and animals. 

How do I choose an energy supplier?

If you reside in one of the 15 states where energy is deregulated, changing energy suppliers could result in monthly electricity bill savings of up to 20 percent. According to the EIA, the typical American household would save more than just pennies—it would be more like $277.18 annually. Before choosing an energy provider, though, you should carefully consider the supplier’s character, costs, and contract length.  

The cost of the service should be considered while choosing an energy provider, as well as the kind of rate you can afford. Most energy companies offer fixed- and variable-rate plans. Within that structure, you also have stable, flat, tiered, and time-of-use rates. Start by determining your family's usage and which rates work best for your needs. 

The length of the plan is another differentiating feature to consider when choosing an energy supplier. Choosing a 6-, 12-, 24-, or 36-month plan can be frightening but may make life more difficult or easier for your needs. Whether you select a short-term or long-term plan entirely depends on how much risk you are willing to take. It is important to remember that rates for shorter-term plans are marginally higher than those for longer-term ones.

How do you choose the right energy plan?

Start by looking at your old energy invoices in the filing cabinet. You can view your current utility or energy supplier contract online as well. Next, you should check your current cost per unit of energy. For electricity, this would be in kWh, and for natural gas, it would be in per therm. Once you know how much you use, you can figure out which plan will work best for you. 

When determining your energy needs, you can also decide if you need to reduce your usage as you consider your energy habits. You might be able to reduce your monthly power or natural gas costs by engaging in energy conservation. You may also have the chance to examine the monthly fee variations for your service. 

If you have a variable-rate plan, you might not be aware of the cost of your energy units until your bill arrives. You can predict exactly how much you will pay for each unit of energy you use when you have a fixed-rate plan. When examining your energy bill, try to compare the periods your household uses the most energy. It is likely that your energy use varies according to the season or whether it is the weekend or a workday.

Many U.S. states have implemented deregulation laws and the energy choice marketplace to provide you, the energy consumer, the freedom to select the right energy supplier for your needs. In addition, green energy plans enable clients to reduce the carbon footprint of their residence or place of business by having renewable energy purchased on their behalf.

How to understand your electric bill

Most energy suppliers forecast demand throughout the day and the year. If you use more energy when there is a high demand, your electricity will cost your supplier more. Your energy supplier will adjust your bill accordingly, and they’ll likely charge you a little more. Being aware of that can help to clarify why prices may differ somewhat each month.

Your electricity bill is calculated by your rate and electricity usage. For example, if you have a fixed-rate at 10 cents per kWh and use the US average of 909 kWh for a month, your bill should be around $90.90.

For more help understanding your electricity bill and where your usage is coming from, check out our other articles:

• How to Understand Appliance Electricity Usage
• Average Cost of Utilities for a House
• Average Apartment Electric Bill

Electricity bills can be confusing – that’s why we try to not only give our customers access to 100% clean energy, but empower them with the tools to manage their electricity usage.

At Inspire Clean Energy, we are driving the demand for clean, green, sustainable energy sources around the country. Since we started our journey back in 2014, we’ve prevented nearly two million metric tons of CO2E emissions from being burned into the atmosphere! We are passionate about providing our diligent, world-saving customers with energy plans that suit their needs and lifestyles.

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