Beatrice Lang
The cost of electricity in Maryland varies depending on a range of factors, including the time of year, time of day or night, and the electricity provider. The average electricity rate in Maryland is 18 cents per kilowatt-hour (kWh), with the average monthly bill for residential customers being $257, which is 11% higher than the national average. Commercial rates tend to be cheaper than residential rates, as businesses consume much more energy and benefit from a volume discount. Maryland has a deregulated energy market, which means customers have the flexibility to choose from 11 different electricity suppliers and plans to find the best rates and contracts to suit their needs.
| Characteristics | Values |
|---|---|
| Average cost of electricity in Maryland | 14.31 cents to 18.10 cents per kWh |
| Average monthly bill | $127.62 to $257 |
| Average yearly cost | $3,084 |
| Average electricity usage | 1,424 kWh per month |
| Cheapest electricity rate | 6.91 cents per kWh |
| Most expensive electricity rate | 20.92 cents to 22.29 cents per kWh |
| Average payback period for solar in Maryland | 11.09 years |
| Average cost of a 12.3 kW solar panel system | $32,000 |
| Potential savings with solar over 20 years | $77,300 |
| Potential increase in average monthly bill by June 2025 | $18 |
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What You'll Learn
Energy demand, fuel costs, and regulatory policies
Maryland's electricity rates vary, with an average residential rate of 18.1 cents per kWh and an average monthly bill of $167.55. However, rates can range from 6.91 cents to 20.92 cents per kWh, depending on the provider and plan selected. Maryland's deregulated electricity market allows residents to choose their electricity supplier, providing an opportunity to reduce costs.
Energy demand in Maryland has been impacted by the state's ambitious climate goals and the transition away from fossil fuels. In 2022, Maryland passed a law targeting a 60% reduction in greenhouse gas emissions by 2031, emphasizing renewable energy. This shift has led to concerns about power grid reliability and rising energy costs. Maryland's per capita petroleum consumption is the second lowest in the nation, with the transportation sector as the primary user. Baltimore, the second-largest coal exporter, highlights the state's involvement in the fossil fuel industry.
Fuel costs in Maryland have been affected by the state's efforts to transition to renewable energy sources. The cost of utility bills has spiked during the winter months, attributed to colder seasons and increased fuel usage for heating homes. Gas and electric distribution costs have risen significantly over the last decade, impacted by laws such as the 2013 STRIDE Act, which encouraged utilities to address aging gas infrastructure.
Regulatory policies in Maryland have reflected the state's commitment to addressing climate change and transitioning to renewable energy sources. However, some policies have resulted in new fossil fuel infrastructure investments. Lawmakers are focused on enhancing the reliability of the state's energy grid while managing the growing demands for electricity and rising costs. Conservative lawmakers have attributed the rising costs to Democratic climate policies, including investments in energy efficiency and renewable sources. Maryland's nuclear power plant, Calvert Cliffs, accounted for 40% of the state's total electricity net generation in 2023, showcasing the state's diverse energy portfolio.
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Deregulation and energy choice
Maryland is one of 26 US states that have some form of energy deregulation, allowing citizens to choose their energy supplier. This came about with the passing of the Electric Customer Choice and Competition Act in 1999, which changed the utility industry in the state.
Prior to this, state utilities held a monopoly on the supply, resulting in sky-high electricity rates. Deregulation has helped to reduce these rates, with the average Maryland electricity rate now 18.10 cents per kWh, compared to the national average of 16.22 cents. The cheapest rate in Maryland is 6.91 cents per kWh.
With energy deregulation, consumers can choose from several Energy Services Company (ESCO) providers, selecting a retailer with a plan that matches their needs and lifestyle. This allows for competitive rates, renewable energy options, and fixed or variable pricing.
Citizens can compare electricity plans from PUC-licensed companies and switch to a competitive supplier to reduce their electricity bill. Energy providers compete by offering lower prices, renewable energy options, and added customer service benefits.
However, critics argue that deregulation enables suppliers to get paid without considering the customer's ability to pay. There is an ongoing debate about whether the deregulated market is working for consumers, with some advocating for greater reins on the industry, while others push for more competition and less regulation.
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Green energy plans
Maryland has a deregulated energy market, which means that residents can choose their electricity supplier and plan. This freedom allows consumers to select from a variety of green energy plans.
Renewable Energy Plans
Some energy suppliers offer renewable energy plans, where they match the amount of energy you use by purchasing an equal amount of renewable energy. This is a great option for those who want to reduce their carbon footprint. Renewable energy is generated from infinite natural sources, such as the sun or wind, and does not harm the environment.
100% Green Energy Plans
There are also 100% green energy plans, where all electricity comes from renewable sources. These plans guarantee that the electricity you use is either coming from renewable energy sources or is offset by clean energy production. Inspire Clean Energy, for example, provides 100% renewable energy to its customers.
Clean Energy Rebate Program (CERP)
The Maryland Clean Energy Program, also known as the Clean Energy Rebate Program (CERP), offers eligible homeowners a monetary incentive of up to $3,000 for installing a clean energy system in their homes. This includes solar panels, solar water heating, and geothermal systems.
Solar Energy
Solar energy is another way to save money and help the environment. The average payback period for a solar system in Maryland is about 11 years, after which your solar investment will start to earn you money.
Energy Marketplaces
Energy marketplaces like WattBuy and EnergySage allow you to compare electricity plans from different companies and choose the one that best suits your needs and values.
Maryland's Renewable Portfolio Standard (RPS) aims for 50% of the state's energy production to come from renewable sources by 2030, so green energy plans may become even more affordable and accessible in the future.
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Time of use (TOU) plans
In Maryland, residents have the freedom to choose their electricity supplier and plan, rather than being restricted to their local utility company. This means that Maryland residents can select a plan that suits their energy needs. One such plan is the Time-of-Use (TOU) rate plan.
TOU plans are offered by the Southern Maryland Electric Cooperative (SMECO) and are available to both residential and commercial customers. With a TOU plan, energy costs are higher during peak times and lower during off-peak times. Peak times during the winter are typically weekdays from 6 to 9 a.m. and 5 to 8 p.m. In the summer, weekdays before 2 p.m. and after 7 p.m. are considered off-peak.
The Standard Offer Service (SOS) rate is an alternative to the TOU plan. With the SOS rate, the cost remains the same regardless of the time of day. Customers can switch between the SOS and TOU rates, and the new rate will begin with the next billing period.
SMECO provides a calculation tool to help customers determine whether they can save money with a TOU rate. This tool uses a customer's energy use data to estimate costs based on their current routine. By shifting energy use from peak to off-peak periods, customers may be able to reduce their monthly bills.
It is worth noting that the TOU rate comparison calculator is not available for SMECO members who have solar panels and participate in the net metering program. Additionally, customers must have a smart meter to select the TOU rate option.
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Solar energy savings
In Maryland, electricity rates vary depending on the provider and plan structure, with residents having the flexibility to choose their electricity supplier. The average electricity rate is 18.1 cents per kWh, with a monthly bill averaging $167.55. However, rates can range from 6.91 cents to 20.92 cents per kWh. This variability in rates presents an opportunity for residents to make significant savings on their electricity bills.
One way to achieve substantial savings is by switching to solar energy. Solar energy not only helps reduce electricity costs but also contributes to environmental conservation. The amount you can save with solar energy in Maryland depends on your current electricity expenditure and the proportion of your electric bill that solar energy can offset.
On average, a solar system installation costs around $32,000 for a 12.3 kW solar panel system before incentives. However, the payback period for this investment is approximately 11 years. After this point, your solar system will start generating a net positive return, and you can expect substantial savings on your electric bills. For example, with a $0-down loan, you could save $3,100 in the first year, $16,200 over five years, $34,300 over 10 years, and $77,300 over 20 years.
Additionally, Maryland residents can benefit from the deregulated electricity market, which allows them to compare rates from multiple suppliers and choose a plan that best suits their needs. By switching to a more competitive plan with lower rates, residents can further enhance their savings. It is advisable to shop for plans during the spring and fall seasons to lock in lower prices before the peak usage periods in summer and winter.
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Frequently asked questions
The average electricity cost in Maryland is 18.1 cents per kWh or $167.55 per month for residential electricity.
The cost of electricity in Maryland depends on your home size, usage, and the provider.
You can save money by switching to a different provider or plan, using less electricity, or generating your own electricity through solar panels.
Yes, the Maryland Office of People's Counsel works to provide rate relief to consumers facing high electricity rates. Additionally, the state has passed legislation like the Electric Customer Choice and Competition Act of 1999 to promote competition and lower energy prices.
You can consider factors such as your energy usage, contract length, and time of use when choosing a plan. Fixed-rate plans can help with budgeting and avoiding price hikes, while tiered plans may be more cost-effective if your usage is average.
