April 6, 2016

Electricity Prices Rise for 30 States, But Some State Leaders Want Them Even Higher

Heath Knakmuhs


Click here for a state by state breakdown of electricity rates.

Today we are back with one of our most popular features – an annual update to our retail electricity price map.  These prices best reflect what business, industry, and you must pay for a given unit – or kilowatt hour – of electricity.  Last year’s edition found electricity prices climbing in all but a single state.  This year, however, our analysis shows a mixed-bag of increases and decreases among the fifty states and the District of Columbia. 

Thirty states continued to watch their average electricity rates increase, while this year twenty states and the District of Columbia enjoyed a reprieve from the elevation of electricity rates they experienced from 2013 to 2014.  Michigan remains the exception, which again saw its average retail electricity price decrease on a year-to-year basis. 

While starting with the highest rate from our 2015 survey (of 2014 annual rates), Hawaii experienced the greatest decline in 2015 average electricity prices, with an over 8 cents/kwH decline.  This can be attributed to Hawaii’s primary reliance on petroleum for electric generation, which has experienced a significant price decline since mid-2014.  Unfortunately for the Aloha State, even with a price drop Hawaii continues to lead the country with the highest electricity rates. 

Alaska remains second in terms of highest cost, with other traditionally expensive states in New England, California, New York, and New Jersey rounding-out the ten most expensive places to flip your light switch.  Given that each of these states have been or are a member of the Regional Greenhouse Gas Initiative (RGGI) or California’s AB 32, each of which are regional precursors to the EPA’s widely-opposed Costly Power Plan, their hold on high-electricity prices is expected.  Interestingly, New Jersey did see a slight decrease in their annual average electricity rates, potentially connected with their withdrawal from the RGGI cap-and-trade system.

On the other end of the spectrum, states that rely primarily on affordable and reliable coal power to supply their electricity continue to enjoy the lowest electricity rates in the nation.  Arkansas, Iowa, Kentucky, Oklahoma, Utah, West Virginia, and Wyoming each find themselves again in the top-ten cheapest states thanks to their primary reliance on coal to generate electricity.  Washington and Idaho continue to enjoy the benefits of low-cost and geographically-dependent hydroelectric power to maintain their positions in the low-cost ten, while Louisiana rounds out the ten-best list with ample supplies of electricity from natural gas, which has seen nearly historic l ow prices as of late.  If you are looking to set up shop with an energy-intensive business, you will surely keep these ten states on the short list.

Given that this year finds us in the heat of the legal battle over the EPA’s Costly Power Plan, we looked at where states land on the electricity price continuum when compared to whether they are opposing – or supporting – EPA’s unprecedented and costly carbon regulation rule.  Of the 28 states that are opposing the EPA and its Costly Power Plan in court, fourteen of those states saw their annual electricity rates go down this past year, while the other half experienced slight increases in their average rates.  Thus, an even shake on whether rates are trending up or down.  On the other hand, among the eighteen states that are supporting the EPA’s Costly Power Plan in court, the following can be observed:

  • Thirteen of those states saw their electricity rates increase over the past year;
  • Only five experienced rate decreases (most of which were only by tenths of a penny, aside from Hawaii); and 
  • Of the five states with rate reductions, two of them are among the three states that are exempt from the Costly Power Plan (Vermont and Hawaii). 

Thus, if you live where your state is subject to regulation by the Costly Power Plan and your state’s leaders are defending that plan in court, you faced a greater than eighty-percent chance that your electric bills have increased in the past year.   

These conclusions beg the question as to why eight of the ten highest-cost states have decided to support the EPA’s effort to drive electricity prices even higher.  Have they considered the homeowners and businesses in their states that have to bear these price increases on top of already unreasonably high-priced electricity?  Perhaps that is a good question to ask those state leaders that are spending taxpayer dollars to support the Costly Power Plan in court.    

Note:  In order to eliminate any confusion that may arise when making a direct comparison of this year’s map to the 2014 rate map, 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 the subsequent months as EIA finalizes their rate data.  We use EIA’s preliminary data in order to deliver timely information, but slight variances from the final figures are possible.  Please note, however, that for the purposes of comparing year-over-year trends, we have used EIA’s near-final 2014 numbers instead of the preliminary numbers used in our 2014 map to maximize the accuracy of our trend analysis.