From Guest Blogger Sara: Energy Rate and Efficiency Comparison
Depending on where you live in the United States, you’ll see that your electricity and energy rates will fluctuate. Electricity providers calculate your energy usage and electricity prices by kilowatt usage, meaning that how much you pay is dependent on how many cents it costs per kilowatt for whatever provider you use. Then the total price of your utility bill is measured by how many kilowatts you use per hour for the duration of the month.
Currently the natural average for electricity providers per kilowatt is about nine cents per every kilowatt used, but that number is not the same for every state. With many states having free retail electricity, a lot of electricity providers are able to set their own rates, which is one of the reasons it fluctuates so much.
The electricity company rates for Dallas homes sits just a hair higher than that of the national average. If you live in Texas, you’re going to see that it’s about ten cents per every kilowatt you use.
The most expensive states in the country when it comes to electricity rates are Hawaii, Massachusetts, Rhode Island, Connecticut, New Hampshire and New York. Hawaii is the most expensive place to live if you’re looking solely at energy rates as they currently pay an average of twenty cents per kilowatt. Connecticut is next on the list with seventeen cents per kilowatt and Rhode Island is third with the average sitting around sixteen cents per kilowatt.
The cheapest places in the United States in terms of electricity rates from retail electricity providers are Wyoming, Idaho, Missouri, North Dakota, and Utah. Wyoming has an average of only about five cents per kilowatt, Idaho and Utah coming in not behind, both of their electricity providers offering energy at a little over six cents per kilowatt.
A lot of the reasons behind differing energy costs depends on how much it costs to produce the energy and how easy it is to sustain it as it’s being fed through to the residential customers. Texas has a lot of various energy providers, but it’s a large state, so it’s going to be more expensive than a small state such as Rhode Island because it takes more to flood the area with electricity.
In that same token, when you’re looking at a place like New York City, the energy rates are higher because of the sheer amount of people who live there and the fact that in general, the city uses more energy than other places around the country. It takes more work to keep the energy flowing consistently at all times throughout the year.
Trying to combat the energy costs can be slightly difficult for some people depending on where they live, but a lot of energy providers across the United States now offer a lot of different ways to become more informed about conserving energy. Energy conservation is the number one way to start saving on the household utility bills. People in Texas, for example, and stop running their air conditioners at during times of the day while those in Illinois can turn the heat down during the winter.
Where you live has a lot to do with how much you’re going to pay for electricity as it’s different pretty much everywhere around the country. Hawaii has the highest energy costs of the United States while Wyoming has the utmost lowest. You can combat the prices by engaging in energy efficient behaviors.
Many utilities also have hugely varying rates based on volume. For example, a company using a small volume of electricity in Cincinnati OH might pay 10 or 11 cents/kWh, while a company buying 10 times more electricity per month likely pays closer to 4 cents/kWh. This is called “declining block” or “regressive” pricing. The price declines the more you buy in the billing cycle.
Most electric utilities on US West Coast have moved to “inclining block” or “progressive” pricing, where the marginal price goes up for greater purchases within a billing cycle.
The benefit of progressive pricing is two-fold. First, utilities typically operate their lowest-cost generators first, turning on or buying their more expensive generation as demand rises. In other words, the most expensive electricity is often the last units supplied, especially during a utility’s so-called “peak demand” periods when coincident consumer demand is highest. In southern and more urban areas, peak demand usually occurs on hot sunny summer afternoons, pushed by air conditioning. In northern climates and rural areas even in mild climates, peak demand is usually during winter early mornings, mostly associated with electric heating.
The other logic behind progressive pricing is it provides greater incentive to larger users to use less. Most studies show that largest users are usually more wealthy, better able to afford either the higher power costs or the added expenses associated with becoming more efficient or installing onsite renewable energy.
In most of the USA where prices are regressive (going down as use goes up) or where prices are flat, it is common for the highest average prices to be on lowest volume users. This often creates poorer incentive to reduce usage. Highest users are paying much lower prices, thereby having longer paybacks to implement efficiency or renewables. Lowest users paying higher average prices have better payback opportunities but are often poorer or smaller, thereby with less ability to afford larger-scale efficiency or renewables.
In my area in rural Kentucky, a recent statewide utility trend is to lower kWh prices while substantially increasing “fixed customer charges”. For example, my fixed monthly charge was $5.50 in 1998, but it will soon be $20. This creates billing regressivity, even though KY has long had most flat residential electric rates (they do not go up or down based on usage volume). For example, a $20/month customer charge adds 5 cents/kWh for a 400 kWh/month user, but only 2 cents more per kWh for a 1000 kWh/month user, and only 1 cent/kWh for a 2000 kWh/month user.
Reducing kWh price and increasing fixed customer fees therefore lengthens a customer’s payback from implementing efficiency or renewables. Also makes it more difficult to achieve a net-zero utility bill, since the fixed customer charge is often payable whether or not any net kWhs are bought.
As a 30-yr energy consultant and designer of super-efficient homes, I have long preferred progressive energy pricing. After all, we all need to use at least a little energy. And it’s the high use which we most should be targeting for major reductions. We need to encourage reductions, especially among our highest users, and studies have shown that many of our highest residential electricity users are our more wealthy households. As affluence and wealth rises, so does electricity use in most cases.
Nice to hear from you again. Where have you been — not that it’s any of my business. 🙂
Still here, Craig, just been very busy recently (fortunately!), a few long projects. Still occasionally visiting 2GreenEnergy, just not leaving recent comments or starting blogs. Hope you are doing well!