Deregulated Energy

Electricity rates by state (April 2024)

Key points
  • Electricity prices have risen more than 90% across the U.S. in the past two decades.
  • Access to fuel sources, local climate, energy demand and government regulation affect your state’s electricity prices.
  • About 75% of customers who can choose their electricity provider for lower rates don’t take advantage of the opportunity.

From February 2023 to February 2024, the average electricity rate in the U.S. increased by nearly 3%, according to the U.S. Bureau of Labor Statistics (BLS). Additional BLS data shows that electricity prices have climbed 29.1% in the past decade and 90.1% over the past two decades.

“We are seeing significant changes in both the supply and demand side of the [energy] equation,” said Don Whaley, advisor to OhmConnect, a retail energy provider (REP), and former president of GreenWave Energy and Verde Energy USA.

“The push toward greater electrification is driving an increase in demand, while the resilience of generation is steadily diminishing as intermittent resources constitute a larger portion of the mix,” said Whaley. “Consequently, the two sides are moving in noncomplementary directions.”

With the resulting upward trend of electricity prices, it’s more important than ever to be aware of what you’re paying for power. The Environmental Protection Agency (EPA) maintains that there are 17 states with deregulated electricity markets, meaning customers in those states can choose their electric company at a competitive rate.

Understanding where your electricity prices fall in relation to your area’s average and knowing whether you can choose your provider and plan can help you reduce your monthly electric bills.

Does your location affect your electricity rate?

Yes, electricity rates vary based on location. The most recent monthly electric bill data from the EIA confirms that the price difference between the states with the most and least expensive electricity — Hawaii and Nebraska, respectively — is 34.43 cents per kilowatt-hour (kWh).

There are a few things that play a role in your local electricity rate, according to the EIA:

  • Fuel availability: Some states have more readily available access to fuel sources to generate electricity. Nebraska, for example, the state with the lowest electricity cost in the country, produces 13% of the nation’s ethanol fuel (biomass), according to the EIA. The flat topography also makes it the fourth-best state in the nation for wind power potential; nearly a third of the state’s energy comes from wind farms. The high availability of affordable renewable energy helps keep the total average price per kWh low.
  • Maintenance costs: All power plants and production facilities — as well as distribution equipment, such as power lines and natural gas lines — require upkeep and maintenance. When repairs and maintenance are more expensive in a state, electricity prices rise to compensate. States prone to natural disasters and extreme storms are more likely to see higher electricity prices to cover the higher cost of maintenance.
  • Demand: The demand for electricity plays a role in price. States with extreme temperatures might see spikes in the average cost per kWh when electricity for heating and cooling is in high demand or when the supply from production facilities can’t support the demand.
  • Government regulation: Electricity prices are regulated by the state government in 33 states. Since each state is governed independently, the prices set by the local government can lead to variations in local electricity prices.
  • Company profit: In the remaining 17 states, deregulated energy markets mean for-profit companies can include a charge in energy prices to maintain profitability.

For example, “Hawaii is heavily constrained in terms of resources, making all its energy alternatives expensive,” explained Whaley. In areas where solar adoption is prevalent, creating an alternative source of electricity and avoiding the need for fossil fuels, retail prices have dropped due to decreased demand. 

“The ‘zero marginal cost’ of solar generation has exerted significant downward pressure on the cost of electricity,” Whaley said.

How do residential electricity rates vary state by state?

Which 10 states have the lowest residential electricity rates?

The average cost per kWh in the U.S. as of January 2024 is 15.45 cents, as per EIA data, but the 10 most affordable states in the country have an average of 10.73 cents per kWh, about 31% lower than the national average.

State2023 Price per kWh (Cents)2024 Price per kWh (Cents)Percentage Change (2023 to 2024)
Nebraska9.359.85+5.35%
North Dakota9.919.88-0.30%
Idaho10.5810.79+1.98%
Missouri10.7310.82+0.84%
Louisiana11.9410.82-9.38%
Utah10.6510.85+1.88%
Wyoming10.2810.86+5.64%
Washington10.4811.09+5.82%
Oklahoma10.9611.16+1.82%
South Dakota11.2511.18-0.62%

Which 10 states have the highest residential electricity rates?

The 10 states with the highest electricity rates in the country, according to the same data from the EIA, average out to 27.99 cents per kWh, which is 171.5% more than the national average.

State2023 Price per kWh (Cents)2024 Price per kWh (Cents)% change (2023 to 2024)
Hawaii44.9644.28-1.51%
Rhode Island28.9631.22+7.8%
California26.4829.49+11.37
Massachusetts31.8328.34-10.96%
Connecticut30.2727.4-9.48%
Maine24.125.89+7.43%
New Hampshire31.7425.07-21.01%
Alaska21.6823.78+9.69%
New York23.623.44-0.68%
Vermont19.9520.98+5.16%

What is an energy market?

The term “energy market” refers to the process by which energy is produced, sold and distributed to customers within a given area. According to the Federal Energy Regulatory Commission, there are 10 electricity markets across the U.S.:

  • California Independent System Operator: Operates in California and Nevada
  • Mid-Continent System Operator: Operates in Arkansas, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, North Dakota, South Dakota, Texas and Wisconsin
  • Independent System Operator of New England: Operates in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont
  • New York Independent System Operator: Operates solely in New York
  • Northwest Power Pool: Operates in California, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming.
  • PJM Interconnection: Operates in Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia
  • Southeast electric market: Operates in Alabama, Florida, Georgia, Mississippi, Missouri, North Carolina, South Carolina and Tennessee
  • Southwest electric market: Operates in Arizona, Colorado, Nevada, New Mexico, Texas, Utah and Wyoming
  • Southwest Power Pool: Operates in Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming
  • Electric Reliability Council of Texas: Operates solely in Texas

Regulated vs. deregulated energy markets

There are two main types of energy markets: regulated and deregulated. In a regulated market, each homeowner is served by a single company that handles energy production, delivery, marketing, sales and customer service. Prices in regulated markets are fixed by the local government.

In a deregulated energy market, the companies that market and sell electricity, create electricity plans and handle customer service are independent, for-profit companies that compete with each other. 

Each home is serviced by a single electricity production company as well as a single company that owns and maintains the power lines and other distribution equipment. These entities remain regulated, but the intermediaries between these companies and customers aren’t regulated by local governments.

In a deregulated energy market, homeowners can choose their provider. They can compare rates and contract terms among plans from the providers in their area and choose the one that suits them best. Some key factors that vary among providers and plans include the following:

  • Cost per kWh
  • Type of rate (variable or fixed)
  • How you pay (prepaid plans or postservice payments)
  • Deposit required to initiate service
  • Length of the contract
  • Percentage of renewable energy delivered
  • Cancellation policies and fees
  • Customer service

According to the EPA, the following 17 states have fully deregulated electricity markets, meaning you have the power to choose your provider and a plan that suits you:

  • California
  • Connecticut
  • Delaware
  • Illinois
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Montana
  • New Hampshire
  • New Jersey
  • New York
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Texas

What’s next?

The price you pay for electricity if you live in a state or area with a regulated energy market is fixed, so the best way to reduce your monthly bills is to take steps to reduce your electricity consumption.

“Insulation and upgraded windows can significantly increase a home's energy efficiency, with insulation likely offering the best value for the investment,” said Whaley. Increasing your home’s energy efficiency in a regulated energy market is your best option for saving on your monthly electricity bills, especially if you live in a more extreme climate.

If you live in a state with a deregulated energy market, you can find a new provider that potentially offers a lower rate than you’re currently paying to save money each month. The Public Utilities Commission in your state should have a website where you can search for and compare plans available in your ZIP code.

Check which plans are available and compare them to your current plan. Consider the cost per kWh, the contract length, the customer review rating of the provider and whether the plan includes renewable energy.

Editorial note: The name “Homefront” refers to the alliance between USA TODAY and Home Solutions that publishes review, comparison, and informational articles designed to help USA TODAY readers make smarter purchasing and investment decisions about their home. Under the alliance, Homefront provides and publishes research and articles about home service and home improvement topics.

Homefront has an affiliate disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Homefront editorial staff alone (see About Homefront). Homefront adheres to strict editorial integrity standards. The information is believed to be accurate as of the publish date, but always check the provider’s website for the most current information.

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