Every day, Americans depend on electricity to power our lives – and every month, we pay for that power via an electric bill. Today, those electric bills represent the largest utility bill for everyday Americans, accounting for over 7% of monthly housing expenditures.
However, not all of us pay the same amount for that power. In fact, there’s a pretty wide disparity.
The U.S. Chamber of Commerce’s Global Energy Institute recently released its annual state-by-state comparison of electricity prices. In a blog post, GEI Senior Director for Policy Heath Knakmuhs detailed some of the top-line findings as well as some of the variation across states:
In 2017, we actually have the highest national average retail electricity price of the past four years: 10.54 cents/kWh. This tops the 2016, 2015, and 2014 national average rates of 10.28, 10.42, and 10.13 cents/kWh, respectively. However, that does not mean that everyone is paying more. In actuality, many of the states with lower prices, such as Louisiana and Texas, are paying significantly lower rates today than they experienced back in 2014.
So why have homeowners and business leaders in some states seen their electricity prices dip while others have watched them surge? Knakmuhs explains:
Not surprisingly, of the eight states that experienced a decline in their electricity rates from 2016 to 2017, half of those states are either awash with shale gas (Pennsylvania and Ohio), or directly border them (Delaware and Maryland). Since New York’s leaders have an irrational aversion to new pipeline infrastructure, they are burdened with higher electricity prices (up .31 cent/kWh last year), while they impose a blockade against American natural gas reaching New England states. Things have gotten so extreme that some states are importing Russian gas from across an ocean instead of utilizing shale from just a few hundred miles away.
Alaska and Hawaii remain challenged due to their remote nature and their inability to tap into a diverse set of energy resources. Nevertheless, those enjoying the tropical trade winds in Hawaii are enjoying electric rates that are over 7 cents/kWh less than they were paying in 2014. That is big progress for the Aloha state, driven in part by lower oil prices and a diversification of resources with the increasing addition of cost-effective renewables to their fuel mix.
Connecticut remains the electricity price loser on the mainland United States, with a 17.62 cent/kWh rate; meaning that residents of the Constitution State are now paying almost as much to power their homes than even grid-constrained Alaskans.
There’s reason to believe that – even in some of the nation’s most expensive states – electricity prices may come down across the country this year as a result of tax reform legislation Congress passed at the end of last year. That’s because utilities normally recover their costs of doing business in the rates that they charge customers, both big and small. The Tax Cuts and Jobs Act lowered corporate tax rates from 35% to 21%, which lowered utilities’ future costs. Those reduced costs are expected to translate into lower rates for customers, which could ease some of rate increases we witnessed this past year.
“The tax cuts are highly likely to have positive impacts on state rates and the overall national average,” Knakmuhs wrote. “Here’s hoping that next year sees more state level rate decreases. That would be good for those states, and good for America’s global competitiveness.”
How does your state stack up? Click here to check out the state-by-state electricity price map.
About the authors
J.D. Harrison
J.D. Harrison is the former Executive Director for Strategic Communications at the U.S. Chamber of Commerce.
