Dan Simms is a contributing writer at USA TODAY Homefront specializing in home repair, renovation and renewable energy. While working as a property manager for one of the largest real estate management firms in New York, Dan worked alongside contractors and renovation specialists to prepare homes for sale. He is an avid DIYer and has completed a shed construction and a bathroom renovation in his own home and investment properties. He lives on Long Island, New York. Reach out to him on LinkedIn.
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From February 2023 to February 2024, the average electricity rate in the U.S. increased by nearly 3%, according to the U.S. Bureau of Labor Statistics (BLS). Additional BLS data shows that electricity prices have climbed 29.1% in the past decade and 90.1% over the past two decades.
“We are seeing significant changes in both the supply and demand side of the [energy] equation,” said Don Whaley, advisor to OhmConnect, a retail energy provider (REP), and former president of GreenWave Energy and Verde Energy USA.
“The push toward greater electrification is driving an increase in demand, while the resilience of generation is steadily diminishing as intermittent resources constitute a larger portion of the mix,” said Whaley. “Consequently, the two sides are moving in noncomplementary directions.”
With the resulting upward trend of electricity prices, it’s more important than ever to be aware of what you’re paying for power. The Environmental Protection Agency (EPA) maintains that there are 17 states with deregulated electricity markets, meaning customers in those states can choose their electric company at a competitive rate.
Understanding where your electricity prices fall in relation to your area’s average and knowing whether you can choose your provider and plan can help you reduce your monthly electric bills.
Yes, electricity rates vary based on location. The most recent monthly electric bill data from the EIA confirms that the price difference between the states with the most and least expensive electricity — Hawaii and Nebraska, respectively — is 34.43 cents per kilowatt-hour (kWh).
There are a few things that play a role in your local electricity rate, according to the EIA:
For example, “Hawaii is heavily constrained in terms of resources, making all its energy alternatives expensive,” explained Whaley. In areas where solar adoption is prevalent, creating an alternative source of electricity and avoiding the need for fossil fuels, retail prices have dropped due to decreased demand.
“The ‘zero marginal cost’ of solar generation has exerted significant downward pressure on the cost of electricity,” Whaley said.
The average cost per kWh in the U.S. as of January 2024 is 15.45 cents, as per EIA data, but the 10 most affordable states in the country have an average of 10.73 cents per kWh, about 31% lower than the national average.
The 10 states with the highest electricity rates in the country, according to the same data from the EIA, average out to 27.99 cents per kWh, which is 171.5% more than the national average.
The term “energy market” refers to the process by which energy is produced, sold and distributed to customers within a given area. According to the Federal Energy Regulatory Commission, there are 10 electricity markets across the U.S.:
There are two main types of energy markets: regulated and deregulated. In a regulated market, each homeowner is served by a single company that handles energy production, delivery, marketing, sales and customer service. Prices in regulated markets are fixed by the local government.
In a deregulated energy market, the companies that market and sell electricity, create electricity plans and handle customer service are independent, for-profit companies that compete with each other.
Each home is serviced by a single electricity production company as well as a single company that owns and maintains the power lines and other distribution equipment. These entities remain regulated, but the intermediaries between these companies and customers aren’t regulated by local governments.
In a deregulated energy market, homeowners can choose their provider. They can compare rates and contract terms among plans from the providers in their area and choose the one that suits them best. Some key factors that vary among providers and plans include the following:
According to the EPA, the following 17 states have fully deregulated electricity markets, meaning you have the power to choose your provider and a plan that suits you:
The price you pay for electricity if you live in a state or area with a regulated energy market is fixed, so the best way to reduce your monthly bills is to take steps to reduce your electricity consumption.
“Insulation and upgraded windows can significantly increase a home's energy efficiency, with insulation likely offering the best value for the investment,” said Whaley. Increasing your home’s energy efficiency in a regulated energy market is your best option for saving on your monthly electricity bills, especially if you live in a more extreme climate.
If you live in a state with a deregulated energy market, you can find a new provider that potentially offers a lower rate than you’re currently paying to save money each month. The Public Utilities Commission in your state should have a website where you can search for and compare plans available in your ZIP code.
Check which plans are available and compare them to your current plan. Consider the cost per kWh, the contract length, the customer review rating of the provider and whether the plan includes renewable energy.
Editorial note: The name “Homefront” refers to the alliance between USA TODAY and Home Solutions that publishes review, comparison, and informational articles designed to help USA TODAY readers make smarter purchasing and investment decisions about their home. Under the alliance, Homefront provides and publishes research and articles about home service and home improvement topics.
Homefront has an affiliate disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Homefront editorial staff alone (see About Homefront). Homefront adheres to strict editorial integrity standards. The information is believed to be accurate as of the publish date, but always check the provider’s website for the most current information.
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