Residential Electric Rates
The average residential electricity rate in the US is $0.1338 per kWh. With an average annual electricity consumption of 11,000 kWh, an American pays an average of $1471.8 for their electricity bill. As residential energy prices keep rising, it is more important than ever to know what exactly residential customers are paying and how residential energy prices are different from commercial electricity rates and industrial electricity rates.
Types of Residential Buildings
First things first, residential energy is any energy that is spent in a residence – the place where people live, sleep and spend their free time. During their daily lives, people use electricity, and although energy consumption is different in every home, homes use less electricity than commercial or industrial buildings. However, with low energy consumption, residential customers usually pay electricity prices that are higher than commercial or industrial energy rates.
Commercial electricity rates, on the other hand, are those applicable to commercial buildings. Shopping malls, restaurants, and banks all use more energy than an average American home. For this reason, the commercial energy rates are lower at $0.1178, as they have a higher energy usage.
Industrial electricity rates, the last of the three kinds, are the lowest of all three. They are applicable to the industrial energy usage of high volume. Factories, airports, and hospitals all use a lot of electricity, far more than a shopping mall or a residential home. For this reason, the average cost of energy that electricity providers can offer to these customers is the lowest: $0.0746 (Source: EIA.gov)
When talking about residential electricity prices, it is important to note that all US households pay different energy prices. How high the average bill in your household will depend on several factors. The factors determining the residential electricity consumption include:
- Where you live – different states have different energy rates,
- The size of your home – larger homes use more energy:
- Single-Family House,
- Condominiums, and
- Mobile Homes;
- The climate in your area – hotter weather means more energy used in the summer, while colder weather means higher electricity usage in wintertime unless residential customers use LNG for heating,
- Whether you live in an energy deregulated area – having energy choice usually brings lower energy rates with a variety of electricity plans,
- The age of your house – older buildings usually use more energy, as they have poor insulation properties and waste a lot of energy.
- Your energy habits – the more appliances you have, the more energy you will use.
A lot of residential customers live in single-family houses or homes. These homes represent a single residential building (usually 1-2 stories high) with a patch of land around it. Residential customers living in this type of building usually have an electricity meter and a dedicated electricity plan. The average bill for this type of building is usually high, as all walls are exposed to the elements.
Apartments are characteristic of larger cities. An apartment is a single residential unit in a larger building. When it comes to metering energy usage, there are two scenarios:
- Every apartment unit is outfitted with an electricity meter,
- The building itself has one electricity meter, with sub-meters for every apartment unit.
In the first case, you get your energy bill every month. In the latter, the building owner or building manager will bring you your bill every month.
Condominiums are similar to higher residential buildings with apartments. In a condominium, you can purchase your own unit and become its owner. Metering in condominiums is similar to that of apartments. Every unit can be submetered or connected to its own meter. The monthly energy billing is organized the same way as in apartments.
Mobile homes are quite common in the states. Mobile homes, or large trailers, can be individuals or groups on the same piece of land. There is an off-grid and on-grid variant, depending on the energy sources. In the off-grid variant, the electricity supplier is a power generator. In the on-grid variant, mobile homeowners use existing connections that have been set up by the property owner – the electric bill has to be paid every month.
Energy Deregulation in the U.S.
Energy deregulation in the US has begun in the 1990s. This is a lengthy process that not all states have adopted. Energy deregulation is applicable to both commercial and residential customers. Deregulated energy states offer energy choices to their residents, while every energy supplier offers the ability to compare electricity plans and choose what is the best for you and your household.
Energy deregulation was introduced when the national average price of electricity for residential and commercial customers became too high. The benefits of a deregulated market include fixed rates, variable rates, green energy plans, as well as a variety of payment options, freebies, and better electricity service. Whichever energy plan you may choose, either as a commercial or a residential customer, you know that you will be getting the same high-quality service as any other residential customer.
Effects of Energy Deregulation
Energy deregulated markets experience a drop in energy prices as soon as new energy suppliers enter the area. Although the drop is not always so sharp or long-lasting, many deregulated areas have lower electricity rates when compared to the national average. The electric rates are not set up by the government but rather by those who provide power. Government agencies are there to ensure fair electricity access and standard service for everybody.
There are currently 15 deregulated states. Residential and commercial customers in these states enjoy a lot of energy prices, good service, and other benefits that a deregulated market brings. The energy price is always calculated per kilowatt-hour used, with additional fixed monthly charges for both the utility company and the energy provider. U.S. Energy Information Administration names the following 15 states as deregulated:
- New Hampshire,
- New Jersey,
- New York,
- Texas, and
- Washington D.C.
Connecticut also has a deregulated market. The state controls how the energy prices are formed and can refuse to change the pricing if it is not justified. The prices can be adjusted twice a year, on January 1st and June 1st. Typically, energy prices are lower in the latter part of the year.
In the state of Delaware, Newark, Wilmington, and Dover offer energy options. The average rate is $0.1177 per kWh, lower than the US average. The energy price has kept its level since 2014 and is expected to change little with power price changes in the wholesale market.
Illinois introduced deregulation to its power market in 2007. Since then, the price has dropped, and a number of new regulations have been included. Under these regulations, residential Illinois customers can group together and get lower energy prices than they could individually.
Maine has an average electric rate of $0.0165 per kWh and moderate energy use when compared to the rest of the US. If you decide to stay with your utility company, you will get the Standard Service rate and conditions. However, if you would like to explore your options and ensure long-term savings, you should check out Electricrate for more competitive pricing.
Maryland has bifold deregulation. Both electricity and LNG are deregulated in this state. Residents need to contact their desired provider to get electricity service and pay a switch fee unless they are asking for a connection to a new address. Maryland electricity averages at $0.1261 per kWh.
The State of Massachusetts has a higher energy price: $0.2232 per kWh. At this price, every kWh saved means significant savings per year, so choosing your power provider wisely is a must. Massachusetts has one of the highest energy usages in the US.
Michigan residents pay an average of $0.1692 per kWh of electricity used. With around 40% higher energy use than the rest of the country and older homes as well, this number is likely to go up. Michigan residents can choose their energy plans based on price, contract term, and payment options.
New Hampshire offers electric deregulation to all its residents. The state has organized its power market as Texas and Ohio did. An Ohio resident can enjoy competitive rates, freebies, and great electric service.
New Jersey has a low energy usage, similar to New York. With $0.1618 per kWh, this is one of the more expensive states when it comes to electricity. The average electricity consumption is around 600 kWh per month, and many energy options allow significant savings on the energy bill.
Believe it or not, residents of New York are among the lowest energy consumers in the US. With an average use of just 600 kWh per month and the average electricity price of $0.1827 per kWh (higher than the US average), the average electric bill is around $105. Energy deregulation offers competitive residential electricity prices.
Fixed-rate plans, variable-rate plans, and flexible payment options are just a few of the benefits that Oregon residents can enjoy. With the price of $0.1101 per kWh, electricity is cheaper in Oregon than in the US. The state has its Renewable Portfolio Standard and aims for 25% renewable energy by 2025.
Pennsylvania deregulated its power market back in 1997. This was done by passing the Electric Choice and Competition Act, which enabled private and public companies to sell residential electricity for low rates. Pennsylvania has one of the most diverse deregulated energy markets, with electricity prices of $0.1309 per kWh, lower than the national average.
Texas is one of the best-deregulated areas in the US. With over 100 power providers and hundreds of electricity plans, Texas energy service marks great innovation, freebies, and competitive rates. Fixed-rate plans, variable energy plans, renewable, and plans with flexible payment models are all available in this state at an average price of $0.1139 per kWh.
Although the District of Columbia is not deregulated, D.C. residents can choose their power provider. Since the D.C. average electric rate of $0.1226 per kWh is lower than the US average, it is safe to conclude that this hybrid model gives good results. D.C. also has plenty of renewable energy options and aims at 100% renewable energy in the grid by 2040.
Residential/Retail Electricity Providers
Residential or Retail Electricity Providers (REPs) work in deregulated states and can offer energy choices to their customers. These electricity options come at different electricity rates and varying conditions, so using websites, such as Electricrate.com, to quickly browse and compare hundreds of electricity plans is a must. Every energy supplier works according to laws and regulations in each individual state.
If you live in deregulated service areas, it is important to understand the difference between a utility company and a power provider. A utility company is in charge of maintaining the power grid, the poles, and the meters. It also delivers electricity to your home. A power provider, on the other hand, is the electricity company or electricity supplier that you purchase the delivered electricity.
To put it simply, if you order a package from Amazon.com, it will be delivered by UPS or another postal or parcel service. In this case, Amazon.com is the equivalent of a power provider. UPS, on the other hand, is the equivalent of a utility company.
Residential Electricity Plans
Existing and new customers in deregulated areas can choose their power provider based on their prices, the monthly fixed fee cost, as well as any other services, such as smart home solutions, free home energy audit, and many more. The power of choice is not limited to new customers only, as existing customers can choose to switch their power providers for a certain fee.
As deregulated areas have a lot of energy options to offer, it is necessary to understand some terms before you continue to purchase your new power agreement. Several states that have undergone deregulation offer several kinds of energy plans. Here are the different types of energy plans that you can expect to find in deregulated areas:
- Fixed-rate energy plans,
- Variable-rate energy plans,
- Renewable energy plans,
- Solar plans, and
- Natural gas plans (available only in gas-deregulated areas).
A fixed-rate plan ties in your energy rate for the duration of the contract. This means that no surges in energy prices will have an effect on how much you pay for electricity each month. As fixed-rate plans offer a reliable supply at fixed rates, they allow you to relax and avoid any negative surprises. We always recommend going for a good, long-term, fixed-rate energy plan.
Beware that some deregulated areas offer fixed-rate plans only. The state of Connecticut, for example, allows its power providers to change their fixed rates twice a year: on January 1st and June 1st. This means that the power provider is protected in case of a sudden increase in electricity price, but so are you, as the state has to allow the price change to take effect.
Variable Rate Plans
Variable-rate plans offer energy rates that are usually lower than fixed rates. However, there is a small catch. Namely, you will be able to save money only during certain times of the year, such as spring and autumn, when electricity prices are relatively low. During the summer in Southern states and winter in Northern states, you will have to pay higher prices for electricity. We do not recommend you choose this type of electricity plan despite the chances to save money.
Renewable Energy Plans
Renewable energy plans are becoming more popular in the US. You can choose this type of electricity plan if you would like your new address to have a low carbon footprint. With energy deregulation, more power providers offer these plans than ever, as the eco-conscious market demands them. Energy in these plans comes from several sources:
- Hydropower plants,
- Wind farms,
- Solar farms,
- Biogas plans,
- Tidal power plants,
- Wave-energy generators, and many more.
Solar plans offer some of the cheapest power options in the world. As solar has become cheaper than coal, many utilities are looking to build more large-scale solar farms. These farms can power tens of thousands of households and have a very low footprint on the environment. Solar plans usually offer very low prices.
Natural Gas Plans
LNG plans include plans that allow cooling and heating for your home. The LNG supply is usually carried out by a single company per area, while you can also decide to choose another LNG provider. However, with rising gas prices, more people decide to go with better insulation and an energy-efficient solution, such as a heat pump.
Residential Electricity Rates by State
Here is an overview of residential electricity rates by state. You will also find the average electric bill, which is based on an estimation of 900 kWh of monthly energy use. This is guidance, as your energy bill may be significantly different.
|State||Average Electric Rate||Average Electric Bill|
|Alaska||$0.2132 per kWh||$191.24|
|Alabama||$0.1238 per kWh||$111.05|
|Arkansas||$0.0942 per kWh||$84.50|
|Arizona||$0.0117 per kWh||$104.95|
|California||$0.2143 per kWh||$192.23|
|Colorado||$0.1214 per kWh||$108.90|
|Connecticut||$0.2129 per kWh||$190.97|
|District Of Columbia||$0.1226 per kWh||$109.97|
|Delaware||$0.1177 per kWh||$105.58|
|Florida||$0.1165 per kWh||$104.50|
|Georgia||$0.1094 per kWh||$98.13|
|Hawaii||$0.3055 per kWh||$274.03|
|Iowa||$0.1087 per kWh||$97.50|
|Idaho||$0.1005 per kWh||$97.50|
|Illinois||$0.0123 per kWh||$110.33|
|Indiana||$0.1225 per kWh||$109.88|
|Kansas||$0.1187 per kWh||$106.47|
|Kentucky||$0.1046 per kWh||$93.83|
|Louisiana||$0.0958 per kWh||$85.93|
|Massachusetts||$0.2232 per kWh||$200.21|
|Maryland||$0.1261 per kWh||$113.11|
|Maine||$0.0165 per kWh||$148.01|
|Michigan||$0.1692 per kWh||$151.77|
|Minnesota||$0.1692 per kWh||$111.95|
|Missouri||$0.0938 per kWh||$84.14|
|Mississippi||$0.1088 per kWh||$97.59|
|Montana||$0.1072 per kWh||$96.16|
|North Carolina||$0.0106 per kWh||$95.08|
|North Dakota||$0.0944 per kWh||$84.68|
|Nebraska||$0.0941 per kWh||$84.41|
|New Hampshire||$0.1893 per kWh||$169.80|
|New Jersey||$0.1618 per kWh||$145.13|
|New Mexico||$0.1253 per kWh||$112.39|
|Nevada||$0.1153 per kWh||$103.42|
|New York||$0.1827 per kWh||$163.88|
|Ohio||$0.1183 per kWh||$106.12|
|Oklahoma||$0.0892 per kWh||$80.01|
|Oregon||$0.1101 per kWh||$98.76|
|Pennsylvania||$0.1309 per kWh||$117.42|
|Rhode Island||$0.2341 per kWh||$209.99|
|South Carolina||$0.1199 per kWh||$107.55|
|South Dakota||$0.1099 per kWh||$98.58|
|Tennessee||$0.1036 per kWh||$92.93|
|Texas||$0.1139 per kWh||$102.17|
|Utah||$0.1004 per kWh||$90.06|
|Virginia||$0.1105 per kWh||$99.12|
|Vermont||$0.1838 per kWh||$164.87|
|Washington||$0.0976 per kWh||$87.55|
|Wisconsin||$0.1405 per kWh||$126.03|
|West Virginia||$0.0112 per kWh||$100.46|
|Wyoming||$0.1047 per kWh||$93.92|
Why is business electricity more expensive than residential?
Business electricity is sometimes more expensive than residential. The reason for this is that businesses have higher energy demands and put higher stress on the grid. This is why business electricity rates are usually, but not always higher than residential electricity rates. However, in deregulated energy markets, it is usually the opposite, as businesses have a higher energy use and can therefore be given lower electric rates.
How much electricity does the average person use?
An average American’s energy use is around 900 kWh per month or 11,000 kWh per year. At the average electricity rate of $0.1042 per kWh, it translates to ~$90 per month per person in the US. In bigger households, the average electricity use may be a bit lower, as a lot of the energy consumption is divided between family members (think of an oven preparing a meal for a family of four at the same time and with the same amount of energy as if it was cooking for one).
Do smart meters increased electric bill?
No, smart meters do not increase electric bills. If anything, smart meters can measure your electricity usage more precisely than older thermostats. Smart meters also come with the added comfort of remote reading and less downtime. Smart meters can also be used by solar owners for net metering and a significant reduction of their energy bills.
How can I reduce my electricity bill?
The best and the easiest way to reduce your electricity bill is to run a DIY or a professional home energy audit. This report will grade your house and pinpoint the areas where you can save on your energy bill. The biggest advantage of professional home energy audits is that they are usually provided for free by your local utility or power provider and can give you a step-by-step guide on which actions you should implement first to save most on your electricity bill.
If you think that your energy bill is too high, it probably is. Luckily, 15 US states have introduced energy deregulation and can offer competitive rates and contract terms to their residents. Use Electricrate.com to explore rates in your area and secure low energy prices for years to come.