Published
April 13, 2023
The 11th edition of our annual Electricity Price Map shares some bad news for consumers and businesses: electricity rates rose by unprecedented amounts in 2022.
In 2022, an overall average national increase of 1.39 cents per kilowatt hour (cents/kWh) amounted to a 12.52% nationwide increase in electricity rates. This follows a nearly 6 percent overall increase in 2021, which was the previous high since we began this effort in 2012.
As in years past, we built our electricity price map utilizing the most recent calendar year electricity rate data released by the U.S. Energy Information Administration (EIA). The electricity price “bands” highlighted on the map reflect what consumers, businesses, and industry must pay for a standardized unit—or kilowatt hour (kWh)—of electricity. We compiled this data into a “heat-map” theme, which readily identifies the states with lower electricity prices (e.g. cooler shades of blue) while highlighting those where residents are paying more per unit to power their homes and run their businesses (identified in orange and red hues). Yellow rounds out the middle ground between the lower- and higher-priced states. Our companion state price listing sorts all fifty states and the District of Columbia according to their respective price bands and ranking within an individual band. The states with competitive (i.e. lower) retail electricity prices are grouped toward the left, while the states where individuals and businesses are enduring perpetually higher rates for their electricity use appear toward the right.
Compared with past editions of our electricity map, there was quite a lot of upward movement between categories. Electricity price increases seen across the board in all but two states in 2022 resulted in five states moving beyond our prior lowest-priced category (8.00-9.00 cents/kWh), and an additional 9 states moving up and beyond the 9.01-10.00 cents/kWh category. As a result, this year we combined the two lowest price categories into one 2-cent band and carved the now more crowded 10.01-12.00 cents/kWh category into two separate groups. In addition, the migration of multiple states beyond the 15-20 cent/kWh threshold dictated the creation of a new band defined by that unenviable price floor.
Throughout most of 2022, the war in Ukraine had a profound impact on global natural gas sourcing, demand, and pricing, which imposed ripple effects upon domestic natural gas prices. While markets have adjusted and domestic natural gas production has increased, the delayed impacts of previously higher natural gas prices will continue to work their way through utility accounting mechanisms. Eight of the ten states that experienced the greatest percentage increases in their 2022 electricity rates rely on gas as either their primary or secondarily most-used generation type. Only Hawaii and Illinois bucked that trend, with the former most reliant on oil due to its isolated geography and the latter being home to the largest nuclear generation arsenal among all fifty states.
While New England continues to have the highest average electricity price at 20.6 cents/kWh, the states with the ten biggest percentage increases from 2021 to 2022 are found across seven of the ten regions categorized by the EIA price data. Hawaii’s 9.54 cent/kWh increase over the past year meant a 31.5% increase in that state’s electricity rates, the highest rate growth in the nation. For comparison, the state with the tenth highest percentage increase from 2021 through 2022 was Florida, where its 1.85 cent/kWh increase drove rates up by 17.34%. Second through ninth in terms of biggest year-to-year percentage increases in rates were Maine, Nevada, New Hampshire, Illinois, Pennsylvania, Georgia, Oklahoma, and Virginia, in that order. As previously noted, most of these states obtain a significant amount of their electricity from natural gas generation, with that associated fuel most impacted by the geopolitical upheaval in Eastern Europe.
Meanwhile, eleven states continue to benefit from electricity rates below the 10 cent/kWh mark. Wyoming, North Dakota, Idaho, Utah, and Nebraska each come in under 9 cents/kWh, which is commendable in today’s higher priced environment. Washington State, Oregon, Iowa, West Virginia, Arkansas, and Montana round out the states with the lowest electricity rates. Wyoming and North Dakota are the real winners, however, as they constitute the two lowest-priced states on the 2022 price map while also being the only two states that saw a decrease in their electricity rates from 2021 to 2022. Coal and non-hydro renewables (wind, solar, etc.) are the predominate sources of electricity generation in these two states.
California and New England continue to dominate the highest price band (15+ cents/kWh) identified on our 2022 map. Aside from Alaska and Hawaii, which struggle with limited generation options and geographic isolation from diversified energy grids, California, New England, and New York comprise the entirety of the top ten highest-priced states. Along with higher natural gas costs – and these states comparative high-reliance on that fuel to generate electricity – these states also share energy policy prescriptions that have not made reliability or affordability priorities. Policy does matter, and the permitting challenges that can be even more daunting in these high-priced states delay the rate relief that the consumers and businesses across these states would view as long overdue.
While natural gas prices have subsided to some extent, enduring and even increasing geopolitical tension appears to be the new norm, thereby making it crucial that we leverage and develop our electricity generation resources here at home – whether they are traditional resources like natural gas, nuclear, or hydro, or the rapidly-emerging sources of wind and solar coupled with storage. If we Permit America to Build we can realize an even more diverse, reliable, and affordable electric generation mix. Power lines, pipelines, generation plants, and the roads to and around them all suffer from excessive red tape and unnecessary and duplicative regulatory reviews. Efforts to enhance the predictability, efficiency, and transparency of energy projects, while supporting timely stakeholder input, have the potential to further reduce the carbon emissions of our electricity sector while also lowering the price of the power delivered to consumers. That sounds like a win-win in my book. Let’s hope Congress sees it that way as well.
Author’s Note: In order to eliminate any confusion that may arise when making a direct comparison of the 2022 electricity price map to the 2021 version, it is important to note that we utilize the U.S. Energy Information Administration’s (EIA) preliminary annual data, from the February 2023 edition of Electric Power Monthly, to develop our annual maps and rate comparisons. The EIA’s preliminary data is then subject to modification in subsequent months as EIA finalizes their annual data. We use EIA’s preliminary data in order to deliver timely information, but slight variances from the final figures do occur. Please note, however, that for the purposes of comparing year-over-year trends by state or nationally we have used EIA’s near-final 2021 numbers instead of the preliminary numbers used in last year’s pricing map to maximize the accuracy of our trend analysis.
About the authors
Heath Knakmuhs
Knakmuhs studies, develops, and communicates strategic energy policies and initiatives with a focus on the electric power sector. He also examines the impact of regulatory action, market-based factors, and emerging threats on the American electric grid.
