Electricity Costs by State

By SBE Council at 28 June, 2016, 9:06 am

by Raymond J. Keating-

Electricity often is a significant cost for small businesses. And these costs vary considerably state by state, thereby affecting the competitiveness of individual enterprises and industries, the well-being of workers and consumers, business and investor decisions, and the overall well-being and competitiveness of a state’s economy.

Consider where each state ranks, for example, in terms of retail electricity prices (cents per kilowatthour for all retail sectors – January to March 2016 (latest data from the U.S. Energy Information Administration)), as well as the vast differences between those states that have among the lowest costs versus high-cost states.

The top 10 best states in terms of lower electricity prices are: 1) Oklahoma, 2) Louisiana, 3) Arkansas, 4) Washington, 5) Iowa, 6) Kentucky, 7) Idaho, 8) Nevada, 9) Texas, and 10) Wyoming.

Meanwhile, the bottom 10 in terms of the highest electricity prices are: 41) New York, 42) Maine, 43) Vermont, 44) California, 45) New Hampshire, 46) Massachusetts, 47) Rhode Island, 48) Connecticut, 49) Alaska, and 50) Hawaii.

Consider that the U.S. average is 9.98 cents per kilowatthour, while the range between the top state and the worst state was a breathtaking 16.29 cents per kilowatthour. And if we decide to limit this comparison to the continental 48 states (eliminating Alaska and Hawaii), the difference between the least costly and costliest states registers 10.59 cents per kilowatthour.

Of course, the costs of energy are impacted by a variety of factors, including economic growth, investment in exploration and development of resources, the particular energy resources being utilized (such as coal, natural gas or renewables), political risks, and government mandates, regulations and taxes.

Indeed, governmental factors certainly explain part of the difference in energy prices from state to state.  For example, what taxes are in effect? What mandates are imposed by either the federal government or by the states that either directly or indirectly affect prices?

In the end, elected officials need to be aware of how their policies impact the costs of electricity and the cost of fuel. It matters to consumers and businesses of all types and sizes; to the competitiveness of each state; and to the overall economy.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.