Beatrice Lang
Hawaii has the highest electricity prices in the United States, with Hawaiian residents paying, on average, $0.396 per kilowatt-hour for electricity. In comparison, the average cost for the rest of the country is $0.13 per kilowatt-hour. The high electricity prices in Hawaii can be attributed to the state's reliance on imported petroleum for electricity generation, the isolated island grids, and the cost of shipping oil. Each island in Hawaii is responsible for generating its own power, and with no nearby utility companies to draw power from in the event of a problem, the state must maintain reserve generating capacity and multiple distribution routes, further contributing to the high electricity costs.
| Characteristics | Values |
|---|---|
| Reason for high electricity prices | The cost of imported oil used to power the islands' generators |
| % of fuel cost in a typical bill | 50% |
| Isolated geographic location | No nearby utility companies to draw power from in case of a problem |
| System reliability | Need for reserve generating capacity and multiple distribution routes |
| Highest average electricity price | More than triple the U.S. average price |
| Share of total energy consumption by petroleum | 90% |
| Hawaiian Electric's average price per kilowatt-hour | $0.396 |
| Average electric bill in Hawaii | $355.39 |
| Average bill for a couple in a 2-bed, 1-bath house | $190-$250 |
| Share of electricity from renewable sources | 33% |
| Solar power's contribution to total electricity | 22% |
| Small-scale solar generation ranking among states | 11th |
| Lowest per capita electricity consumption | Yes |
| Highest share of households without a heating system | 45% |
| High adoption levels of | Solar photovoltaic systems |
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What You'll Learn
High reliance on imported oil/petroleum
Hawaii has the highest average electricity prices in the United States, with residential electricity prices averaging 27.5 cents per kilowatt-hour in 2016, more than twice the national average. In November 2024, the average electric bill in Hawaii was $355.39, with residents paying $0.396 per kilowatt-hour. The high electricity prices in Hawaii are largely due to the state's reliance on imported oil and petroleum for electricity generation.
Hawaii's isolated location contributes to the high cost of electricity, as the state cannot easily draw power from nearby utility companies in the event of a problem. The state's electricity is generated from imported fuel oil, which is subject to fluctuating costs. This, combined with the high cost of shipping oil to the islands, results in higher electricity prices for consumers.
Petroleum accounts for about 90% of Hawaii's total energy consumption, the highest share for any state. The state's last utility-scale coal-fired power plant closed in September 2022, as Hawaii transitions to 100% renewable energy sources. In 2024, about 33% of Hawaii's total generation statewide came from renewable sources, with solar power providing about 22% of the state's electricity.
While Hawaii has the highest electricity prices, it also has the lowest per capita electricity consumption. The mild tropical climate means that heating is rarely needed, and many households have adopted solar photovoltaic systems, reducing their reliance on the electrical grid. To offset high electricity costs, residents are encouraged to use solar energy and solar water heaters to power their homes efficiently and cost-effectively.
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Isolated location with no shared utility companies
Hawaii has the highest average electricity prices in the United States, more than triple the national average. The state's reliance on imported petroleum for electricity generation and its isolated island grids are the main contributors to these high prices.
Each of Hawaii's six main islands has its own electricity grid, and these grids are not connected by undersea electricity transmission cables. As a result, each island must generate its own power and cannot draw on the resources of neighbouring grids in the event of a problem. This isolation means that, for system reliability, Hawaii must maintain reserve generating capacity and multiple distribution routes, which drives up costs.
The cost of imported fuel oil, which powers many of the islands' generators, is a significant factor in the high price of electricity in Hawaii. Fuel can account for roughly 50% of a typical electricity bill, and fluctuations in fuel prices can have a substantial impact on the overall cost of electricity. The higher costs associated with shipping oil to Hawaii further contribute to the high electricity prices in the state.
Hawaii's unique challenges in generating and distributing electricity have resulted in the state having the highest average electricity prices in the nation. The isolated nature of the islands' grids and the reliance on imported fuel contribute to the high cost of electricity for residents and businesses.
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High shipping costs
Hawaii has long been known for its high shipping costs, which have contributed to the overall high cost of living in the islands. The state's isolation and position as an island make it reliant on ocean freight, which can be costly. The Jones Act, a federal law that restricts water transportation of cargo between US ports to US-owned, US-crewed, US-registered, and US-built vessels, further increases shipping costs by limiting the number of vessels that can legally deliver goods to Hawaii. This lack of competition allows shipping companies to charge higher rates.
The high cost of shipping to Hawaii is reflected in the prices of goods, with the state importing more than 80% of all goods, 90% of its food, and 95% of its energy resources. The limited supply of American-made and operated ships compared to the global supply also contributes to the higher shipping rates charged by carriers like UPS and FedEx. Hawaii's small total market and lack of competition in various industries further exacerbate the issue.
Shipping costs have a significant impact on inflation in Hawaii, with freight costs estimated to contribute between 0% and 7% to inflation. However, the impact of shipping costs on overall prices is overshadowed by other factors such as expensive rents, electricity, and services. The high cost of land, in particular, has a much larger impact on prices, with real estate costs estimated to be at least eight times that of shipping.
While shipping costs are a contributing factor to Hawaii's high electricity prices, other factors such as the state's reliance on petroleum, the high cost of renewable energy projects, and the overheads of local utility companies are also cited as reasons for the expensive electricity rates in the state.
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Fluctuating fuel costs
Hawaii has the highest average electricity prices in the United States. In 2016, prices averaged 27.5 cents per kilowatt-hour, more than twice the national average. In November 2024, the average electric bill in Hawaii was $355.39, with residents paying $0.396 per kilowatt-hour.
The high cost of electricity in Hawaii is due in large part to the fluctuating cost of fuel, which makes up about 50% of a typical electricity bill. Hawaii relies heavily on imported petroleum, which must be shipped to the islands, to generate electricity. As a result, the price of oil can vary significantly, driving up the cost of electricity.
The state's isolated geographic location also contributes to high electricity prices. Each of Hawaii's six main islands has its own electricity grid, and they are not connected by undersea cables. This means that each island must generate its own power and cannot draw on the resources of nearby utility companies in the event of a problem. To ensure system reliability, Hawaii must maintain reserve generating capacity and multiple distribution routes, which increases costs.
In addition, Hawaiian Electric is the only electrical distribution company in the state, giving it a monopoly on the market. While the company must adhere to regulations on pricing, it can still pass on higher costs to consumers, including the increased expenses associated with shipping oil.
To offset these high electricity costs, many Hawaii residents have turned to solar energy. The state has seen a high adoption of solar photovoltaic systems, which has reduced the amount of electricity purchased from the grid. Solar water heaters are also becoming more common, providing a cost-effective way to heat water without using electricity.
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$10.47
Low electricity consumption
Hawaii has the highest average electricity prices in the US. This is due to the state's reliance on imported petroleum for electricity generation, the fluctuation in the cost of fuel, and its isolated island grids. Each of Hawaii's six islands has a separate electricity grid, and they are not interconnected by undersea electricity transmission cables. As a result, each island must generate its own power, and there is no option to draw power from neighbouring utilities in the event of a problem.
- Appliances and electronics: Purchase energy-efficient products and operate them efficiently. For example, a microwave uses half the energy of a conventional oven. If you use a conventional oven, do not pre-heat it for longer than necessary. Pre-heat food in the microwave and then finish cooking it in the oven. Similarly, when doing laundry, wash and dry full loads of clothes and use the cold water setting on your washer. If you have to wash a small load, use the appropriate water-level setting. Also, consider air-drying your clothes on a rack or indoor clothesline.
- Reduce "phantom" and "vampire" loads: These refer to electricity that is wasted when electronics are not in use or are in "standby" mode. Plug your computer and television into power strips and turn off the power strip when not in use.
- Thermostat and water heater adjustments: Lowering your water heater temperature setting to 120 degrees Fahrenheit can reduce your energy costs by 4% to 22% annually. Similarly, adjusting your thermostat by a few degrees when you are not home or at night can also reduce your energy consumption.
- Home improvements: Make sure your windows and doors are properly sealed to prevent energy loss. Close your blinds or drapes when it gets dark outside to cut down on heat loss through your windows. Also, remember to regularly service your heating and cooling systems to ensure they are running efficiently.
- Lighting: Keeping lights on accounts for about 15% of a home's energy usage. Switch to LED lighting and install dimmer switches to reduce energy consumption.
- Off-peak hours: Many utilities offer programs that encourage customers to use electricity during off-peak hours, passing on savings through rebates or reduced rates. If possible, shift your power usage to these off-peak times, such as running your dishwasher or doing laundry late in the evening.
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Frequently asked questions
Electricity prices in Hawaii are generally higher than on the U.S. mainland due to the high cost of imported oil used to power many of the islands' generators.
In 2024, about 33% of Hawaii's total generation statewide came from renewable sources of energy.
Hawaii has the highest average electricity price in the U.S. However, in 2016, residential customers in four states—South Carolina, Alabama, Connecticut, and Maryland—spent more per household for electricity.
Hawaii has the fourth-lowest electricity use in the nation. In 2016, Hawaii's electricity consumption was 6,100 kWh per customer, while Maryland's was almost twice as high at 11,900 kWh per customer.
Photovoltaic cells and solar water heaters are great ways to reduce electricity costs in Hawaii.
