COVID Increased Household Electricity Use, But Some Felt it Far More Than Others
No matter where you live across America, along with a myriad of other challenges, 2020 likely presented you with higher home electricity bills than in years past. This was not due to a nationwide spike in electricity rates; rather, it was because the coronavirus pandemic drove most of us to stay at home, thereby using our lights, appliances, and electronics far more than would otherwise be the case. In fact, it has been estimated that Americans spent $6 billion more on household power consumption from April 2020 to July 2020 than normal. How hard this increased electricity consumption hit your pocketbook was more impacted by geography than your videoconference habits, however. A serial-Zoomer in Oklahoma paid half the electricity cost as one in New York.
Perhaps more than ever before, your state’s electricity prices directly impacted the level of cost savings you may have seen from working from home. Thus, this year’s version of our annual electricity price map should hit both close to home – and to your WFH.
Overall, nationwide average electricity prices edged up by slightly over a dime between 2019 and 2020, now coming in at 10.66 cents per kilowatt-hour (cents/kWh). This increase was not felt everywhere though, as 23 states and the District of Columbia actually benefitted from a decrease in their average electricity prices during 2020. Only slightly more states experienced rate increases in 2020 (26 states, to be exact), while Illinois wins the consistency award with its projected 2020 rates of 9.56 cents/kWh equaling those experienced throughout 2019.
As in years past, we continue to build our electricity rate map utilizing the most recent calendar year price 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 compile this data into our streamlined “heat-map” theme, which readily identifies the states with lower electricity prices (cooler, darker colors) while highlighting those where residents are paying more per unit to power their homes and run their businesses (orange and red hues). Our companion state price page sorts all fifty states and the District of Columbia according to their respective price ranges. The states with competitive (i.e. lower) retail electricity prices are grouped toward the left, while the states where individuals and businesses are more likely struggling to pay for their increased COVID electricity use appear toward the right.
The eight members of the dubious over-15 cent club remained unchanged in 2020. Due to their geographic and electrical isolation, Alaska and Hawaii are perennial members of this club. However, it is unfair to count their unique circumstances against them as they are unable to access the diversity of resources linked across the broad, interstate grid networks of the lower-48 states.
The remaining members of the over-15 club, however, can point to their longstanding regional policy choices – which tend to foreclose access to a wide diversity of energy resources and/or electricity generation fuels and related infrastructure – as continuing to drive their electricity rates to the top of the stack. New England contributes Connecticut, Rhode Island, Massachusetts, New Hampshire, and Vermont, checking-in at first, second, fourth, fifth, and sixth most expensive electricity rates within the continental United States. Meanwhile California, which experienced the highest year-over-year jump in its average electricity rate (adding 1.26 cents/kWh!), now ranks as the 3rd highest in the lower 48, at an astonishing 18.15 cents/kWh.
Connecticut, which retains its dubious spot with the mainland U.S.’s least affordable average retail electricity price, rose again this year to come in at 19.19 cents/kWh. In a surprising convergence, Connecticut’s average rate is closing in on the 20.20 cents/kWh paid in remote Alaska. For the sake of further comparison, 23 states on our price map pay electricity rates that are less than half of those charged in the Constitution State.
New York, New Jersey, and Maine remain in the second-highest pricing tier, ranging from 14.90 cents/kWh in the Empire State to the 13.59 cents/kWh charged to Mainers. In disappointing news for the Wolverine State, Michigan’s .81 cent/kWh increase between 2019 and 2020 moved it alongside these higher-priced eastern locales.
On to the good news…
The states comprising our lowest electricity pricing tier – where residents enjoy average rates less than half of that common across New England – grew by one with the addition of North Dakota, whose since-revised EIA pricing data would have moved them into the lowest-priced category on our 2019 price map. Oklahoma leads the way with the lowest average electricity price in the nation, swapping spots with Louisiana, the holder of that spot on our 2019 map.
Oklahoma is a true success story with respect to the benefits of a diverse generation portfolio and the ability for natural gas to support robust renewable output. In 2019, Oklahoma ranked second to Texas in total electricity generated from wind, with wind providing nearly 35% of Oklahoma’s net generation – leading every other source. Concurrently, Oklahoma contains the third-largest natural gas reserves in the nation, with the state exporting three times as much it consumes to northern and eastern markets. Given its plentiful natural gas resource, the fuel powers the majority of Oklahoma’s dispatchable electric generation, smoothing out the variable nature of Oklahoma’s robust wind resources. Coal and hydroelectric assets contribute as well, but the partnership between natural gas and wind turbines is perhaps stronger in Oklahoma than anywhere else.
While Texas’ independent electricity market has made a lot of news recently, statewide average electricity rates remained low in 2020 at 8.58 cents/kWh. This earns Texas the tenth-lowest average rates in this year’s price map. Like Oklahoma, Texas employs a diverse balance of nation-leading wind-powered generation with its domestically-unsurpassed natural gas production to provide affordable – and usually reliable – electricity to its consumers. Next year’s price map will tell us if the outages and price spikes seen this past February have a meaningful impact on Texas’ average electricity rates.
2020 was certainly a challenging year, but it brought a mixed bag in electricity rates. Lower rates were seen across four of the highest-priced jurisdictions (Alaska, Hawaii, Massachusetts, and New Hampshire), but the other half of the highest priced states (Connecticut, Rhode Island, California, and Vermont) continued to watch their high electricity prices grow. Meanwhile, Mid-Atlantic states and those within the lower half of the American heartland – all with ready access to abundant natural gas shale resources in Pennsylvania, Ohio, Texas, and Oklahoma – continued to benefit from decreasing average electricity rates. Many of these states also grew their capacity to generate renewable electricity, clearly illustrating the essential and beneficial role natural gas can play in a cleaner – and still affordable – energy future.
Author’s Note: In order to eliminate any confusion that may arise when making a direct comparison of the 2020 electricity price map to 2019’s version, it is important to note that we utilize the U.S. Energy Information Administration’s (EIA) preliminary annual data, from the February 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, we have used EIA’s near-final 2019 numbers instead of the preliminary numbers used in last year’s pricing map to maximize the accuracy of our trend analysis.