Introduction – Commerce Electricity Rates
Commerce electricity rates (or commercial electricity rates) are the prices that businesses pay for their electricity consumption, expressed in cents per kilowatt-hour (kWh). Here we provide details on commerce electricity rates. To get these rates a business communicates with a vendor to establish needs and sign up onto a business electricity plan.
Rates vary greatly depending on factors such as geographic location, time of use, type of business, and overall demand and supply.
The data provided by the EIA is a reliable snapshot of commercial electricity rates across the United States.
Commerce Electricity Rates As Of May 2023
| State | Commercial Rate in cents per kWh (May 2023) |
| US Average | 12.31 |
| Alabama | 12.77 |
| Alaska | 21.45 |
| Arizona | 12.09 |
| Arkansas | 10.26 |
| California | 21.90 |
| Colorado | 11.26 |
| Connecticut | 19.25 |
| Delaware | 11.92 |
| District of Columbia | 16.85 |
| Florida | 11.75 |
| Georgia | 10.91 |
| Hawaii | 39.28 |
| Idaho | 8.46 |
| Illinois | 11.82 |
| Indiana | 12.17 |
| Iowa | 10.62 |
| Kansas | 11.01 |
| Kentucky | 11.46 |
| Louisiana | 10.31 |
| Maine | 18.61 |
| Maryland | 12.38 |
| Massachusetts | 17.50 |
| Michigan | 13.70 |
| Minnesota | 12.75 |
| Mississippi | 12.66 |
| Missouri | 9.60 |
| Montana | 12.27 |
| Nebraska | 9.13 |
| Nevada | 11.27 |
| New Hampshire | 20.43 |
| New Jersey | 14.19 |
| New Mexico | 10.32 |
| New York | 16.47 |
| North Carolina | 9.43 |
| North Dakota | 7.79 |
| Ohio | 10.93 |
| Oklahoma | 8.42 |
| Oregon | 10.29 |
| Pennsylvania | 10.69 |
| Rhode Island | 15.62 |
| South Carolina | 10.37 |
| South Dakota | 10.13 |
| Tennessee | 11.54 |
| Texas | 8.68 |
| Utah | 8.50 |
| Vermont | 17.98 |
| Virginia | 9.05 |
| Washington | 9.94 |
| West Virginia | 11.07 |
| Wisconsin | 12.57 |
| Wyoming | 9.87 |
Examining the state-specific commercial electricity rates from May 2023 gives us a detailed look at the geographic differences and nuances that exist within the United States. Here are some noteworthy observations:
- Highest Rates: Hawaii stands out with the highest commercial electricity rate at 39.28 cents per kWh. The high cost can be attributed to the logistical challenges of importing fuels for electricity generation on the islands and the state’s commitment to achieving 100% renewable energy. Other high rate states include California and Connecticut, likely due to a combination of factors such as high demand, cost of infrastructure, and environmental regulations.
- Lowest Rates: The states with the lowest electricity rates are North Dakota and Oklahoma, both under 8.5 cents per kWh. These states are rich in natural resources used for power generation, which can help reduce the cost of electricity.
- Regional Consistency: Within given regions, we can see consistency with the regional trends noted in the previous table. For example, New England states (like Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont) have higher rates, while West North Central states (like North Dakota) and West South Central states (like Oklahoma and Texas) have lower rates.
- Variations: The rates vary significantly from as low as 7.79 cents per kWh in North Dakota to as high as 39.28 cents per kWh in Hawaii. This again illustrates the impact of local factors—such as energy resource availability, infrastructure, and state energy policies—on commercial electricity rates.
- Comparison with U.S. Average: The U.S. total average commercial electricity rate in May 2023 is 12.31 cents per kWh. About half of the states listed have rates below this average, while the other half have rates above it. This shows a relatively even distribution of electricity rates around the mean.
Regional Commerce Electricity Rates
| Geographic Region | Commercial Rate in cents per kWh (May 2023) |
| New England | 18.12 |
| Middle Atlantic | 14.40 |
| East North Central | 12.14 |
| West North Central | 10.46 |
| South Atlantic | 10.75 |
| East South Central | 12.02 |
| West South Central | 8.92 |
| Mountain | 10.92 |
| Pacific Contiguous | 18.51 |
| Pacific Noncontiguous | 30.87 |
The table provided gives a detailed insight into the commercial electricity rates across different geographic regions in the U.S. as of May 2023. Here are some key observations:
- Highest Rates: The Pacific Noncontiguous region has by far the highest commercial electricity rate at 30.87 cents per kWh. This high rate can be attributed to the challenges associated with delivering electricity to noncontiguous states (such as Hawaii and Alaska), including infrastructure costs and the higher costs associated with generating electricity in these regions.
- Lower Rates: The West South Central region enjoys the lowest electricity rates, clocking in at just 8.92 cents per kWh. This could be a reflection of abundant natural resources, such as natural gas and wind energy, prevalent in states like Texas and Oklahoma.
- Coastal vs Central Rates: There appears to be a trend where coastal regions (New England, Pacific Contiguous) tend to have higher rates than the regions in the central part of the country (West North Central, West South Central). This could potentially be due to factors such as population density, infrastructure, and local regulations.
- Variation: There is a significant variation in rates across the country, ranging from 8.92 to 30.87 cents per kWh. Such a broad range suggests that local factors—such as the availability of energy resources, the cost of infrastructure, state energy policies, and demand levels—play a crucial role in determining commercial electricity rates.
- Average Rates: Looking at the overall picture, regions like the Middle Atlantic, East North Central, South Atlantic, East South Central, and Mountain fall within a moderate price range, between 10 to 15 cents per kWh. This suggests that for most of the country, the commercial electricity rates are relatively balanced, without extreme highs or lows.
Methodology
We obtained numbers from a credible source: the Energy Information Administration (EIA).
The EIA is a principal agency of the U.S. Federal Statistical System, which provides independent and impartial energy information to promote sound policymaking and efficient markets.
It is worth noting that our information is drawn from data up-to-date as of three months ago, accessible here: https://www.eia.gov/electricity/monthly/.
Understanding Commerce Electricity Pricing
Commercial electricity pricing involves a complex system of interconnected factors. At the most fundamental level, electricity pricing is primarily determined by the cost of its generation, transmission, and distribution.
- Generation refers to the process of producing electric power from sources of primary energy, such as coal, natural gas, wind, or solar. The cost of generation varies depending on the type of fuel used, the efficiency of the generation technology, and the cost of building and maintaining the generation plant.
- Transmission involves moving high-voltage electricity from the power plants where it is generated to distribution systems. This process requires extensive infrastructure, and the costs associated with maintaining this infrastructure factor into the price businesses pay for electricity.
- Distribution is the final step in delivering electricity. It involves reducing the voltage of electricity and distributing it to individual businesses. The costs here involve maintaining the local grid infrastructure and managing the local utility operations.
Regional Differences
Geography plays a substantial role in determining commercial electricity rates, leading to considerable regional differences. These disparities can be attributed to a variety of factors, such as:
- Availability of local energy resources: Some regions have abundant natural resources used for power generation, like coal, natural gas, or strong solar and wind potential. These resources can reduce the cost of power generation and consequently, the electricity rates.
- Infrastructure and technology: The age, capacity, and efficiency of electricity generation, transmission, and distribution infrastructure can also affect prices. Regions with older, less efficient infrastructure may have higher prices than those with newer, more efficient technology.
- State policies and regulations: States differ in their energy policies, which can influence electricity prices. For example, states with aggressive renewable energy targets might have higher prices due to the initial costs associated with transitioning to cleaner energy sources.
Strategies for Managing Electricity Costs
As a significant operational expense, businesses must implement strategic measures to manage and potentially reduce their electricity costs. Here are a few strategies:
- Energy efficiency measures: Implementing energy-efficient appliances and practices can significantly reduce a business’s energy consumption. This can include anything from energy-efficient lighting and HVAC systems to regular maintenance practices that ensure machines are running optimally.
- Demand response programs: These programs incentivize businesses to reduce their energy consumption during peak demand periods. In return for their flexibility, businesses can receive reduced rates or other financial incentives.
- On-site generation: For some businesses, investing in on-site power generation, such as solar panels or wind turbines, can be an effective way to reduce reliance on the grid and control electricity costs. The feasibility of this strategy depends on factors such as the business’s location and energy requirements.
- Energy audits: Regular energy audits can help businesses identify wasteful practices and potential areas for improvement in energy usage. This can be a cost-effective way to reduce energy consumption without impacting business operations.
