Trystan Casey
The cost of electricity varies across the United States, with rates differing between states and even utility areas within the same state. The average American pays 16.13 cents per kilowatt-hour of electricity, with the lowest average electricity rate being in North Dakota at 10.2 cents per kilowatt-hour. The cheapest electricity rate on the market is currently 10.6 cents per kilowatt-hour in Houston, Texas, which is 29% lower than the average rate in the state.
| Characteristics | Values |
|---|---|
| Location with the lowest electricity rate | North Dakota (10.2 cents per kilowatt-hour) |
| Average electricity rate in the US | 16.13¢ per kWh of electricity |
| State with the lowest rate | Utah (11.48¢ per kWh) |
| State with the highest rate | Hawaii (43.11¢ per kWh) |
| Average electricity rate in Texas | 14.89 cents per kWh |
| Average electricity rate in Houston | 15.81 cents per kWh |
| Cheapest electricity rate in Houston | 10.6 cents per kWh |
| Cheapest electricity rate in Texas | 10.9 cents per kWh |
| Average bill in Texas | $170 per month |
| Average bill in Hawaii | $88.42 per month |
| Average bill in Utah | $88.42 per month |
| Factors that influence electricity rates | Fuel costs, infrastructure, regulated vs. deregulated, time of year, location, home size, electricity rate, and occupancy |
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What You'll Learn
US electricity rates
Electricity rates in the US vary from state to state and even among utility areas in the same state. The average home in the US consumes 855 kWh of electricity per month. The average electricity rate in California, for example, is 31.66 cents per kWh, with the state's average residential energy usage being 491 kWh per month, resulting in an average monthly bill of approximately $155.45.
The lowest average electricity rates in the US are in North Dakota, at 10.2 cents per kilowatt-hour (kWh). Other states with low electricity rates include Louisiana, which had the lowest average electricity rate of 11.04 cents per kilowatt-hour in 2020. The latest average commercial electricity rate in Texas was 8.64 cents per kWh, with companies in the state paying an average of $523 for their electricity bill.
On the other hand, Hawaii has the highest electricity rates in the country, at 42.69 cents per kWh. States with harsher winters will generally have higher electricity rates due to increased demand for heating. Similarly, in Southern states, summer rates are typically higher than winter rates due to the higher energy demand for cooling systems.
The type of energy generation in a state can also impact electricity rates. Some states produce renewable energy through wind, solar, and hydropower, which can affect the supply and demand of energy and, consequently, electricity rates. Additionally, states with deregulated electricity markets allow customers to choose their electricity provider, potentially lowering their electric bills by shopping for suppliers and rates that best suit their needs.
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Texas electricity rates
Texas has a deregulated electricity market, which means that Texas residents and businesses can choose their electricity providers from a competitive market. This has resulted in electricity providers offering competitive rates and plan terms to gain business.
The average residential energy rate in Texas is 14.89 cents per kilowatt-hour (kWh), while the commercial energy rate is 8.64 cents per kWh. Texans consume large amounts of electricity due to higher temperatures, so lower rates are beneficial. The average American pays 16.13 cents per kWh of electricity.
There are several types of plans available in Texas, including fixed-rate, variable-rate, and prepaid plans. A fixed-rate plan offers a steady electricity rate for a set term length and provides protection against market fluctuations. On the other hand, variable-rate plans change with the energy market and can result in higher bills during peak periods, such as the summer. Prepaid plans are great for those with weak or no credit history, but the rates are a few cents higher than traditional fixed-rate post-pay plans.
Additionally, Texas has emerged with tiered rate plans in recent years. These plans incentivize customers to monitor their usage and sometimes punish those who exceed certain usage tiers. For example, a plan might charge 10 cents per kWh from 500-1000 kWh, then 15 cents for every kWh used over 1001, and 20 cents per kWh over 2000 kWh.
When choosing an electricity plan in Texas, it's important to consider factors such as the time of year, fuel costs, and infrastructure. For instance, summer rates are typically higher than winter rates due to higher energy demand for cooling systems. Natural gas, coal, and oil prices can affect the cost of electricity generation, and infrastructure investments, such as transmission lines and power plant upgrades, are also passed on to the consumer.
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Hawaii electricity rates
Hawaii has some of the highest electricity rates in the US. The average electricity rate in the US is between 11.48 cents and 16.44 cents per kilowatt-hour, while the average residential rate in Hawaii is 37.34 cents per kilowatt-hour, ranking first in the nation. This rate is 214.31% greater than the national average. The average monthly residential electricity bill in Hawaii is $203, which is 89.72% greater than the national average of $107. The average commercial electricity rate in Hawaii is 34.88 cents per kilowatt-hour, also ranking first in the nation. The average industrial electricity rate in Hawaii is 30.82 cents per kilowatt-hour, ranking first in the US as well.
There are several factors that affect electricity rates in different states. States with high living costs or limited natural resources tend to have higher electricity rates. The type of energy generation in a state is another factor that affects rates. For example, renewable energy sources may cost more because you are paying for traditional electricity generation plus a subsidy for green energy.
In Hawaii, the largest electricity provider is Hawaiian Electric, which serves 471,748 total residential customers. The state has a regulated electricity market, which means customers may have only a few electricity supplier choices. Residual fuel oil is the primary fuel type in the state, with 58.99% of electricity production coming from this source. Non-renewable fuels are used in the generation of 78.52% of megawatt hours produced in Hawaii, ranking it 45th worst for total megawatt hours produced from non-renewable fuels.
Hawaii has seen an increase in electricity generation from solar power, with an 18.48% year-over-year increase. The state is 33rd in the country for renewable electricity production per capita, with 1.38 megawatt hours per person per year. However, it is 41st for non-renewable production per capita, producing 5 megawatt hours per person per year.
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Green energy costs
The cost of green energy is a complex topic, and the answer depends on various factors and whom you ask. On the consumer side, green energy often comes at a premium. For example, in Texas, consumers pay a premium for green energy, covering the cost of traditional electricity generation plus a subsidy for green energy. This can amount to an additional 2-3 cents per kWh for Renewable Energy Credits (RECs). However, in some places, the combination of renewables and batteries is now the cheapest electricity option, including in major markets such as China, Germany, Australia, and the United Kingdom.
The cost of renewable energy has been on a steady downward trajectory for over a decade, excluding a stagnation during the Covid pandemic. This decline in cost is expected to continue and possibly accelerate, according to BloombergNEF. The costs of clean power technologies like wind, solar, and battery storage are projected to decrease by 2% to 11% in 2025 and could fall by another 22% to 49% over the next decade, depending on location and government policies.
When comparing the costs of green energy to fossil fuels, it's important to consider the Levelized Cost of Electricity (LCOE), which calculates the estimated expenses over the lifetime of a project. LCOE averages the upfront expenditures that make up most renewable energy projects' expenses over the projected lifetime of the installation. In 2023, the global weighted average LCOE for new onshore wind projects was 67% lower than the weighted average fossil fuel-fired alternative. Similarly, solar PV generation was 56% less than the weighted average fossil fuel alternative in 2023, a dramatic decline from 2010 when it was 414% more expensive.
The cost of green energy also depends on the region. In the United States, the average electricity rate is 16.44 cents per kilowatt-hour, with Hawaii having the highest rate of 42.69 cents per kilowatt-hour. States with high living costs or limited natural resources tend to have higher electricity rates. However, in states with energy choice (deregulated), residents can shop for suppliers and select plans that work for them, potentially lowering their electric bills.
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Lowering electricity bills
Electricity rates vary across the US, with the average American paying 16.13 cents per kWh. The average electricity rate in the US is 16.44 cents per kilowatt-hour, but this can be as high as 42.69 cents in Hawaii. Texas also has high electricity rates, with an average of 11.48 cents to 43.11 cents per kWh.
If you live in a state with energy choice (deregulated), you can lower your electric bill by shopping around for different suppliers and rates and choosing a plan that suits your usage.
There are also several ways to reduce your electricity bill that are within your control. Here are some tips to help you get started:
- Conduct an energy audit: Identify areas where energy may be leaking, such as faulty seals on windows and doors, and make the necessary repairs. Many utility providers offer free home energy audits and can provide recommendations for efficient fixtures and repairs.
- Adjust your thermostat: Lowering your thermostat setting, especially when you're sleeping or away from home, can help reduce your heating and cooling costs. Smart thermostats with pre-programmed temperature settings can also help lower your energy bill.
- Reduce hot water usage: Hot water is the second-largest expense in most homes. Cutting back on hot water usage in the shower, laundry, and dishwasher can significantly reduce your energy bill. Taking shorter showers and installing water-efficient showerheads are simple ways to save both water and energy.
- Use energy-efficient appliances and light bulbs: Replacing old appliances with ENERGY STAR® certified models can help lower your bill. LED light bulbs, in particular, use just 20-25% of the electricity needed for incandescent bulbs.
- Turn off power sources: Many electronics use power even when on standby mode or turned off. Unplug chargers and electronics when not in use, or plug them into a power strip that can be turned off.
- Use timers and motion detectors: Utilize timers and motion detectors for lighting to ensure you only use electricity when necessary.
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Frequently asked questions
The lowest electricity rate per kWh in the US is in Texas, with an average rate of 14.89 cents per kilowatt-hour (kWh).
The average electricity rate in the US is between 16.13 and 16.44 cents per kilowatt-hour.
Factors such as load factor and types of energy generation in your state affect electricity rates. States with high living costs or limited natural resources typically have higher electricity rates.
You can compare electricity rates by state and zip code online. If you live in a state with energy choice (deregulated), you can lower your bill by shopping around for suppliers and selecting a plan that works for you.
You can reduce your electricity bill by making small changes in your habits and by investing in solar panel systems.
