Electricity prices vary widely across the U.S. While the U.S. average electricity rate is 17.01 cents per kilowatt-hour (kWh), state averages range from less than 12 cents to over 30 cents per kWh, depending on the state. In great part, the mix of energy sources used for local power generation determines electricity costs. Additionally, states with abundant energy resources tend to have lower electricity rates than those relying on imported energy. For example, Texas and California both generate a large portion of their power using natural gas, but Texas has much lower electricity costs due to its abundant gas reserves.
Average Electricity Rates by State
As shown in the map below, you’ll find the highest electricity rates on the U.S. mainland in California and the Northeast region. Hawaii and Alaska also have notably high electricity costs due to their reliance on imported fuels and isolated locations. On the other hand, inland states tend to have the lowest electricity costs, particularly in the Midwest and Great Plains regions.
States With The Lowest Electricity Rates
Here, we compare the top 10 states with the lowest electricity rates based on the latest EIA data as of January 2025. These states benefit from abundant energy resources or proximity to energy-rich regions. They also have access to large amounts of wind energy, hydroelectricity or fossil fuels — although their exact energy mix varies. Finally, many of these states have low population densities or compact power grids, resulting in lower transmission and distribution costs.
States with the Highest Electricity Rates
Below, you’ll find the 10 states with the highest electricity rates. In Hawaii and Alaska, high energy costs are largely due to their remote locations and heavy dependence on imported fuels. Although Alaska has significant natural gas reserves, they are located in remote regions and isolated from population centers.
Among mainland states, two main factors typically cause elevated electricity prices:
- Dependence on natural gas imports: California and much of the Northeast U.S. rely on gas for power generation. However, their local production is minimal or nonexistent.
- High population densities: Large populations increase demand on local power grids, driving up their infrastructure and operating costs.
Most states below are major natural gas consumers with little or no local production, which drives up their electricity costs.
Business Electricity Rates by State
Business electricity rates are generally lower than residential rates across the U.S., as shown in the table below. The national average commercial rate is 12.22 cents per kWh, which is 40% lower than the average residential rate of 17.01 cents per kWh.
Since businesses use more energy than homes, they can benefit from economies of scale when purchasing electricity. In deregulated markets, large companies can also negotiate favorable rates with electricity providers.
What Impacts Energy Rates?
Several factors determine electricity rates, but their relevance and impact vary by state. Electricity prices depend on the availability of local resources, grid infrastructure costs and government regulations. Local climate conditions also impact energy costs.
1) Local Energy Resources
States with abundant energy resources usually have lower electricity costs, which applies to both renewable sources and fossil fuels. For example, Texas generates around half of its electricity from natural gas but is also the largest gas producer in the U.S. Texas also produces vast amounts of wind power and solar energy, making it the largest U.S. producer of green energy. Thanks to these factors, Texas has below-average electricity rates. On the other hand, many Northeast states are also gas-dependent, but their energy rates are much higher because they rely heavily on imports.
2) Power Grid Costs
Power generation companies rely on transmission and distribution grids to deliver electricity to homes and businesses. Densely populated areas have an increased power demand, requiring a more robust power grid infrastructure and frequent upgrades. States that rely on electricity imports from neighboring states also face higher grid costs since they must install and maintain more miles of power lines.
3) Government Policies and Regulations
Electricity costs also depend on state regulations, energy programs and taxes. For example, carbon taxes and renewable energy subsidies can drive up electricity costs. Also, states with a deregulated energy sector allow market competition among providers, which leads to a wide range of electricity plans with different rates.
4) Local Climate and Seasonal Energy Usage
Electricity costs tend to increase during summer due to the power demand of air conditioners. This effect is notable in southern states with warmer climates, such as Texas. Electricity rates can also increase during winter due to electric space heating systems, but the effect is usually less pronounced than in summer since many homes rely on gas heating.
Why Do Electricity Rates Vary by State
Electricity prices vary widely across the U.S. because of the uneven distribution of energy resources and population centers. Rates are usually lower in states with abundant energy resources and higher in states that depend on imports. Energy infrastructure costs also vary throughout the country: states that rely on gas and electricity imports from other regions must build more miles of pipelines and power lines to access these resources.
Additionally, consumer demand and home energy usage patterns can impact electricity rates and total energy costs. While prices per kilowatt-hour may be cheaper in Texas, the state has a higher average usage level than other states with more moderate weather conditions. Increased usage often leads to increased costs, regardless of the average energy rate.
Academic researchers and policymakers debate the impact of deregulation on electricity costs. If you compare electricity prices by state, they tend to be slightly higher in deregulated states.
However, you’ll notice that energy rates vary as widely across deregulated states as they do across the country as a whole. For example, both California and Texas have a deregulated energy sector. Despite the presence of deregulation in both states, the average Texas electricity rate is 15.6 cents per kWh, while the California average is nearly twice that amount at 32.68 cents per kWh.
How To Lower Your Electricity Bill
Regardless of the energy prices in your state, you may be able to lower your electricity bill using a variety of methods, from shutting off the lights when you leave the room to investing in more energy-efficient appliances. By leveraging more than one of the tips below, you may be able to achieve greater savings.
- Upgrade to energy-efficient appliances: Upgrade old or inefficient appliances to ENERGY STAR models, which meet EPA standards for energy efficiency. While this represents a large upfront investment, upgrading appliances that use large amounts of power can have a large impact on your monthly costs.
- Use a smart thermostat: According to the U.S. Department of Energy, you can reduce your heating and cooling costs by 10% by setting back your thermostat 7–10°F for 8 hours a day. A smart thermostat can automate this process while “learning” your heating and cooling preferences.
- Install a home solar system: If your property has favorable sunshine conditions, a solar panel system can save you thousands of dollars over time. Solar equipment costs and savings vary by state. However, high-quality solar panels may achieve a payback period of less than 10 years — while having a guaranteed lifespan of 25 years or more.
- Switch your electricity plan: If you live in a state with a deregulated electricity market, such as Texas, you can choose your electricity provider. By comparing electricity rates and switching to a provider with a better energy plan for your needs, you may be able to lower your monthly energy costs.
