Wonder why your average electric bill is so high? Geography plays a surprising role. Electricity prices vary significantly state-to-state. In Hawaii, the average homeowner currently pays $223.23 a month, while in Utah they pay only $81.98. However, not every state that pays less enjoys lower rates. Some pay more but consume less. And it’s this combination of pricing and personal habits that determines the size of your bill.
What Affects Electricity Consumption?
Your choices help decide how much you pay the electric company at the end of the month. Some are obvious, but others aren’t. For instance:
What Determines the Price of Electricity?
Electricity rates are affected by a wide range of factors, including government policy and economic trends. Some are under our control, while others are entirely out of our hands, such as:
- Fuel. Whether it’s coal, diesel, propane, or natural gas, power plants need to burn fuel to generate electricity. However, fuel prices fluctuate according to production and availability. Companies might have trouble extracting resources or shipping fuel where it’s needed. Overseas crises, such as the Ukrainian War, can shake up international markets and drive up prices as well.
- Power Plant Costs. Constructing, maintaining, and operating power plants costs a lot of money, which has to be recouped through electricity sales. This means areas with newly installed plants may wind up paying a little more, at least in the short term. However, old, outdated plants are normally a bigger concern. Because they require greater upkeep, the homes they supply are normally subject to higher rates.
- Transmission Costs. Distributing electricity requires a lot of infrastructure and the cost to build, maintain, and operate it is generally passed on to the consumer.
- Weather Conditions. Extreme temperatures increase demand. Depending on where you live, prices typically rise as a result of heat waves or cold snaps. Sadly, some areas suffer from both. Weather also impacts renewable sources such as wind turbines and solar panels. Cloudy or windless days may restrict supply and cause a price spike.
- Regulations. America doesn’t have an energy policy. It has 50. Each state decides how to regulate electricity within its borders. Some allow utilities to compete against each other on the open market. Others rely on a single, centralized provider. A few allow companies that distribute energy to compete with each other, but not companies that generate it.
Average Electric Bill By State
The United States Energy Information Administration (EIA) tracks electricity prices across the country. According to their latest report, released in April 2022, here are the electricity rates for each state and how much they pay each month, on average.
state and how much they pay each month, on average.
|State||Residential Rate ￠per kHW||Commercial Rate ￠per kHW||Average Electric Bill|
How to Reduce Your Average Electric Bill
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