This article will highlight US states with the highest electricity prices and the possible reasons behind it. If you want to skip our overview of the country’s electricity grid, read 5 States With Most Expensive Electricity In The US.
Over the past few years, the US electricity system has undergone significant changes in generation, consumption patterns, and pricing. Although shifts in the electric sector are common, the period from 2021 to 2023 saw some remarkable trends, and states with most expensive electricity in the US paid a substantial price for it. Electricity pricing mirrors the balance between supply and demand as well as production costs. Between 2021 and 2022, consumers faced a sharp 10.1% rise in the average residential retail price of electricity. From 2022 to October 2023, this upward trend continued, albeit slower, with a year-on-year price increase of 4.2%.
Moreover, from 2021 to 2022, the country saw a 2.9% increase in utility-scale electric power generation. The growth is attributed to an expanding economy, evolving consumption habits, and a strong push for electrifying sectors previously reliant on fossil fuels. This increase in power generation coincided with a 3.2% rise in retail sales of electricity, indicating higher demand from both residential and commercial end users, as reported by the Energy Information Administration.
Historically, coal and natural gas have been fundamental to US power generation. However, there has been a notable shift towards cleaner and renewable sources like wind, solar, and hydroelectric power in recent years. Due to significant investments in clean energy, totaling $141 billion in 2022 in the US alone, the EIA anticipates that the country’s solar generating capacity will grow between 325% and 1019% by 2050 compared to 2022. Similarly, wind generating capacity is projected to increase by 138% to 235% during the same timeframe. Reports also hint that the US’s annual renewable energy capacity could triple within a decade’s time to reach 110 gigawatts.
However, it’s crucial to recognize that the energy landscape is not uniform across the country. States have varied energy portfolios influenced by natural resources, policy decisions, and economic factors. For example, California’s proactive approach towards renewables has transformed its energy profile, with most of its in-state electricity generation stemming from solar and hydroelectric sources. These state-level decisions significantly influence electricity prices, causing some states to pay more than others.
Maintenance of The National Power Grid
Much of the US power grid was constructed over a century ago, and it has been increasingly strained by weather events. A stark illustration of its vulnerability was the 2021 Texas power crisis, during which a cold spell left millions without electricity and led to over 200 casualties. To mitigate these terrors, President Joe Biden’s administration has recently announced $3.5 billion in grants to bolster the aging infrastructure. The primary objective of these maintenance projects is to safeguard the electricity grid against extreme weather and fires, with an additional emphasis on integrating more renewable energy sources into the transmission system.
The funding will support 58 projects across 44 states, sanctioned under the bipartisan infrastructure law Biden signed in 2021. This represents the largest direct investment in the nation’s power grid to date, according to reports. The recent investments are projected to add approximately 35 gigawatts of electricity to the grid, predominantly from wind and solar projects.
We have already covered the 20 Countries With Highest Cost Of Electricity; read to know where the utility causes the biggest dent to the pocket.
Major Players in the US’s Clean Energy Market
As the trend towards sustainable lifestyles grows, many of the biggest power generation companies in the world are seizing the opportunity. For example, Duke Energy Corporation (NYSE:DUK), which provides electricity to approximately 8.2 million retail customers across six states, intends to increase its renewable energy capacity to 30 GW by 2035.
Recently, the company expanded its solar energy resources in Indiana to bolster its renewable energy portfolio. According to a news update from Duke Energy Corporation (NYSE:DUK) on 22nd June, the company has partnered with a renewable energy developer, Ranger Power, to purchase 199 megawatts of solar power from the Speedway Solar facility based in Indiana. The 20-year power purchase agreement between Duke Energy Corporation (NYSE:DUK) and Ranger Power is designed to supply solar energy to about 35,000 homes. Construction of this solar facility commenced in March 2023 in Gwynneville, Ind., with commercial operations expected by September 2025.
Another prominent name in the top renewable energy companies in the USA is NextEra Energy Inc (NYSE:NEE), recognized as the world’s largest producer of wind and solar energy. Over the past decade, the company’s wind energy capacity has nearly tripled due to its competitive advantage. Until Q2 2023, NextEra Energy Inc (NYSE:NEE)’s generation capacity had reached around 63 gigawatts, with the recent addition of 2 gigawatts of low-cost solar energy to its network.
It’s evident that the company is keenly expanding its solar and wind capacity, and FPL SolarTogether, a subsidiary of NextEra Energy Inc (NYSE:NEE), is working to launch the largest community solar program in the US. This project aims to introduce 1780 MW of new universal solar capacity to the US grid network, potentially serving an estimated 300,000 customers.
Let’s now steer toward US states with the priciest electricity!
20 States With Most Expensive Electricity In The US
Our Methodology
For our list of 20 States With Most Expensive Electricity In The US, we consulted the most recent cost chart on the US Energy Information Administration (EIA) website. The states were then listed in ascending order based on their residential electricity prices for July 2023.
20 States With Most Expensive Electricity In The US
20. Iowa
Electricity Cost in Cents per Kilowatt-Hour (kWh): 15.07
Iowa also ranks among the 10 states with the highest electricity sales per capita, and nearly 62% of its in-state electricity production comes from wind turbines. The commitment to renewables reflects in the state’s electricity consumption patterns and helps stabilize electricity costs. However, Iowa does face challenges with grid reliability and infrastructure updates necessary to efficiently distribute the generated wind energy.
19. Minnesota
Electricity Cost in Cents per Kilowatt-Hour (kWh): 15.45
Minnesota’s two nuclear power plants, Prairie Island and Monticello, powered 24% of the state’s electricity net generation in 2022, according to the EIA. notably, the Prairie Island nuclear plant is the state’s second-largest power plant by capacity and generation. Seasonal temperature extremes lead to varied electricity demands, peaking during the frigid winters. Urban centers like Minneapolis-St. Paul have higher living and operational costs, influencing the overall electricity cost structure of the state.
18. Ohio
Electricity Cost in Cents per Kilowatt-Hour (kWh): 15.85
Ohio’s electricity market is deregulated, meaning consumers can choose their electricity providers, leading to competitive pricing. Ohio experiences steady electricity demands throughout the year, with industrial activities being major consumers. According to EIA, Ohio was the fourth-largest electricity consumer among the US states and also came in the top 10 electricity-generating states. The state’s living costs are generally lower than the national average, but the electricity cost is influenced by factors such as energy source mix, infrastructure maintenance, and grid upgrades.
17. Maryland
Electricity Cost in Cents per Kilowatt-Hour (kWh): 16.05
Maryland’s energy mix is diverse but leans towards nuclear energy and natural gas. Seasonal changes, marked by hot summers and cold winters, lead to spikes in electricity usage, particularly in populated regions like Baltimore. However, Maryland’s per capita electricity consumption ranks the fourth lowest in the nation. The state’s closeness to major East Coast urban centers influences its higher living costs, reflected in its electricity rates. In 2021, the Calvert Cliffs power station, Maryland’s sole nuclear facility, produced 37% of the state’s electricity. It is one of the states with the highest electricity cost.
16. Nevada
Electricity Cost in Cents per Kilowatt-Hour (kWh): 16.35
Nevada’s power grid is primarily managed by the Western Electricity Coordinating Council. Benefiting from expansive desert regions, Nevada has invested significantly in solar energy. However, rapidly expanding cities like Las Vegas and Reno exert pressure on the power infrastructure. Most of the state’s largest power plants are gas-fired, which contributes to 50-60% of its electricity generation.
Additionally, the Hoover Dam, one of the country’s major federal hydroelectric projects, is located on the Nevada-Arizona border and provides nearly 4% of Nevada’s electricity. In 2022, Nevada was responsible for 24% of the state’s geothermal electricity production, emphasizing its commitment to a sustainable power grid.
15. District Of Columbia
Electricity Cost in Cents per Kilowatt-Hour (kWh): 16.61
The District of Columbia is part of the PJM Interconnection and meets its power needs through a combination of imports and local generation. In 2019, DC enhanced its Renewable Portfolio Standard to mandate that 100% of its electricity come from renewable sources by 2032, with at least 5.5% from solar energy. The high density of governmental buildings, monuments, and residential areas ensures a steady demand for electricity. Due to its entirely urban nature and the many federal structures, living costs are high, correlating with elevated electricity prices.
14. Wisconsin
Electricity Cost in Cents per Kilowatt-Hour (kWh): 16.94
The 14th on our list of states with the highest cost of electricity is Wisconsin. Wisconsin’s power grid primarily operates under MISO, relying mostly on coal, though renewables are becoming more prevalent. The state’s nuclear power plants contribute to a shrinking 16% of its total electricity generation, down from 22% a decade ago. Unlike many states with expensive electricity, Wisconsin’s industrial sector is the largest consumer, using 31% of the state’s total electricity.
13. Pennsylvania
Electricity Cost in Cents per Kilowatt-Hour (kWh): 17.97
Traditionally, coal has been a major power source in Pennsylvania, the third-largest coal-producing state. However, there’s a growing shift towards natural gas and renewables. Seasonal demands influenced by its humid continental climate determine consumption patterns. Cities such as Philadelphia and Pittsburgh contribute to the state’s higher living costs, which in turn impact electricity prices. The EIA states that Pennsylvania is the second-largest energy supplier to other states, only behind Texas.
12. New Jersey
Electricity Cost in Cents per Kilowatt-Hour (kWh): 18.54
Located within the PJM Interconnection, New Jersey boasts a balanced energy profile comprising nuclear, natural gas, and expanding renewable sources. Approximately 16% of households use electricity for heating, thereby increasing demand. Summers, with their air conditioning needs, strain the power grid. Notably, NJ’s transportation sector consumes the most energy, closely followed by residential and commercial sectors. NJ is also among the top states with the most electric vehicles and continues its shift towards renewables.
11. Michigan
Electricity Cost in Cents per Kilowatt-Hour (kWh): 19.32
Michigan is 11th on our list of the states with costly electric power. Michigan’s grid largely functions under MISO and is transitioning from coal to natural gas and renewables. According to the EIA, the state’s electricity generation from natural gas increased from 11% in 2010 to 34% in 2022. Cold winters create substantial heating demands, with 27.9% of the state’s electricity consumption powering the residential sector.
10. Vermont
Electricity Cost in Cents per Kilowatt-Hour (kWh): 20.46
Vermont’s electricity infrastructure is managed by the Vermont Electric Power Company (VELCO). The state is a leader in renewable energy, emphasizing hydroelectric, solar, and wind sources. Even with a smaller population, electricity demand surges in colder months due to heating requirements and use of furnaces. In 2021, Vermont generated nearly 100% of its electricity from renewables, which constituted about 33% of the state’s total consumption. Around 50% of Vermont’s utility-scale electricity generation, and 46% of its overall generation, originates from hydroelectric power. With its commitment to green energy and relatively high living costs, these elements factor into Vermont’s electricity pricing.
9. New York
Electricity Cost in Cents per Kilowatt-Hour (kWh): 22.27
Historically, New York’s energy grid has relied on nuclear energy, but now there’s a growing emphasis on renewables, especially wind and solar. The shift is evident as the state, similar to the District of Columbia, revised its Clean Energy Standard in 2019 to require 100% carbon-free electricity from renewable sources and nuclear energy by 2040. The state’s diverse landscapes range from the bustling metropolis of New York City to the serene landscapes of upstate, leading to varied consumption patterns. Living costs in metropolitan areas are exceptionally high, which naturally results in residents paying more for utilities.
8. Alaska
Electricity Cost in Cents per Kilowatt-Hour (kWh): 24.88
Being one of the coldest places in the world, Alaska faces unique geographical challenges that fragment its power grid. Many isolated communities rely on microgrids, often powered by diesel generators. The state possesses vast energy resources, but tapping into them locally can be challenging. The extreme cold necessitates high energy consumption for heating, making Alaska the second-highest consumer of electricity per capita in the country. It’s noteworthy that living costs in Alaska are the sixth highest in the country due to its challenging geography and extreme weather.
7. Rhode Island
Electricity Cost in Cents per Kilowatt-Hour (kWh): 25.95
Part of the New England power grid managed by ISO-NE, Rhode Island has actively increased its renewable energy portfolio. The state took a significant step by inaugurating the first US offshore wind farm off Block Island. With its coastal cities and industrial sectors, electricity consumption remains consistent. Especially in areas like Providence, the living costs are on the higher end, influencing the structure of its electricity costs.
6. Connecticut
Electricity Cost in Cents per Kilowatt-Hour (kWh): 26.78
On the sixth spot on the list of states with highest prices of electricity is Connecticut. Also under the ISO-NE jurisdiction, Connecticut sources its electricity from a balanced mix of energy sources, with natural gas playing a pivotal role. Data reveals that in 2021, natural gas fueled 55% of Connecticut’s total electricity net generation. While the state sees peak demands mainly during summer and winter, Connecticut remains one of the least energy-intensive economies in the US.
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Disclosure: None. 20 States With Most Expensive Electricity In The US is originally published at Insider Monkey.