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Where are the cheap electricity rates in the U.S.?

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By Arthur Murray September 11th, 2020
3 min read
For business

(Sept. 11, 2020)

Residential electricity rates and bills differ from state to state.

Oleh Slepchenko/Shutterstock

Many Americans are shocked each month when they open that monthly letter from their utility hoping to see cheap electricity rates – and bills. But for a select few, it doesn’t happen.

According to the September Rate Report, the average residential electricity rate in the U.S. is 13.28 cents per kilowatt hour (more on what a kilowatt hour is later). Average monthly residential usage is 914 kilowatt hours (kWh). That puts the average U.S. electricity bill at $121.38.

Those numbers, of course, are all based on national averages, not taking into account location, climate, seasonality, and other factors that can affect bills at the state level. (All rate and usage information is the latest released by the Energy Information Administration.)

States with the cheapest electricity rates and bills

Low rates are terrific for households, of course, but there’s another factor tied into those electricity bills – usage. Louisiana’s electricity rates are the lowest, as are those in many southern and southwestern states.

But usage in those states is often high. Louisiana’s average monthly usage is the nation’s second-highest – only 1 kWh per month behind Tennessee.

What’s a kilowatt hour?

A kilowatt hour is a way to measure how much electricity you use. The actual definition is complicated. But here are some things that use a kilowatt hour to run (roughly):

  • Heating something in a microwave for two minutes every day for a month.
  • Enjoying light from a 10-watt LED bulb for 100 hours.
  • Watching six hours of TV on an LCD model.

So where are the lowest electricity bills?

Air conditioning and heating a residence take up a major portion of a home’s energy consumption. And while air conditioning is all electricity-based, home heating comes in a number of forms – electricity, fuel oil, natural gas.

That’s why electricity consumption is higher in southern states and electricity bills tend to be higher there as well. As for states where bills are lowest, western states in general fare well.

Which states aren’t getting a break on electricity rates and bills?

Unfortunately, cheap electricity rates aren’t present in every state. Hawaii residents, for example, pay higher rates because most fuels have to be obtained from outside the state.

As mentioned previously, monthly usage is highest in the South, where nearly every house is air-conditioned.

Finally, that combination of rates and usage means bad news for some residents in some states.

What to do about electricity bills

Since usage and electricity rates figure into energy bills, lowering both is the best way to reduce what you’re paying each month.

Reducing usage

Some tips to cut your usage:

  • Close blinds in the summer and open them in the winter. The first keeps the house cooler in the summer, meaning less work for the air conditioning. The second allows the sun to warm the home at least a small amount, again reducing reliance on heating sources (including electricity, particularly in the South).
  • Change air filers regularly.
  • Use ceiling fans. In winter, set the blades to run in a clockwise direction. Reverse them during summer.
  • Unplug when you can. Cellphone and other chargers use electricity whenever they’re plugged in to an outlet – even if they’re not actively charging. TVs and computers also use electricity when they’re plugged in – even if they’re turned off. Power strips can make fighting “vampire energy” easier.
  • Wash clothes in cold water.
  • Check and reinforce the seals on your windows and doors so you won’t lose cooler air in the summer and heat in the winter.
  • Close off unused rooms so you’re not heating or cooling them.

Reducing electricity rates

In many states, there’s not much residents can do to reduce the rate they pay for electricity – utilities have a monopoly on service.

But in states with energy deregulation, consumers can choose their electricity provider, though the electricity will still be delivered by a utility company.

Still, the power to choose a provider gives customers an opportunity to lower their electricity supply rates. Among deregulated states are the following:

Connecticut Illinois Maine
Maryland Massachusetts New Hampshire
New Jersey New York Ohio
Pennsylvania Texas