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.
You may also be looking for business electricity rates, a broader term that could encompass both commercial rates and industrial rates. ShrinkThatFootprint has an integrated article that looks at commercial, residential and industrial rates at the same time.
While commercial rates are for standard business operations, industrial rates are for businesses that require large amounts of power for manufacturing, production, or other high-energy-consuming processes. Industrial rates might be lower per kilowatt-hour (kWh) due to the volume of consumption but come with different demand charges and tariffs that reflect the unique usage and infrastructure needs of such operations.
Finally, the data we analyze below is provided by the EIA and is a reliable snapshot of commercial electricity rates across the United States.
Commerce Electricity Rates As Of Feb 2024
| State | Commercial Rate in $ / kWh |
| Alabama | $13.52 |
| Alaska | $20.58 |
| Arizona | $11.55 |
| Arkansas | $10.21 |
| California | $23.14 |
| Colorado | $11.49 |
| Connecticut | $19.28 |
| Delaware | $12.29 |
| Florida | $11.84 |
| Georgia | $11.51 |
| Hawaii | $40.63 |
| Idaho | $9.01 |
| Illinois | $11.17 |
| Indiana | $12.18 |
| Iowa | $9.75 |
| Kansas | $10.59 |
| Kentucky | $10.80 |
| Louisiana | $10.50 |
| Maine | $18.61 |
| Maryland | $12.48 |
| Massachusetts | $19.32 |
| Michigan | $13.57 |
| Minnesota | $11.84 |
| Mississippi | $12.21 |
| Missouri | $9.35 |
| Montana | $12.26 |
| Nebraska | $9.08 |
| Nevada | $11.28 |
| New Hampshire | $19.45 |
| New Jersey | $13.74 |
| New Mexico | $11.23 |
| New York | $17.98 |
| North Carolina | $9.69 |
| North Dakota | $7.33 |
| Ohio | $11.14 |
| Oklahoma | $9.00 |
| Oregon | $10.54 |
| Pennsylvania | $11.25 |
| Rhode Island | $19.31 |
| South Carolina | $10.87 |
| South Dakota | $9.92 |
| Tennessee | $11.81 |
| Texas | $8.76 |
| Utah | $8.40 |
| Vermont | $18.43 |
| Virginia | $9.06 |
| Washington | $10.27 |
| West Virginia | $11.66 |
| Wisconsin | $12.52 |
| Wyoming | $10.09 |
| USA Average | $13.05 |
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 continues to lead with the highest commercial electricity rate at $40.63 per kWh, underscoring the state’s unique energy challenges, including the high costs associated with importing fuels and its ambitious renewable energy targets. Following Hawaii, California ($23.14) and Massachusetts ($19.32) also exhibit high rates, which can be attributed to factors such as high demand, the cost of maintaining and upgrading infrastructure, and stringent environmental regulations.
Lowest Rates: North Dakota presents the lowest rate at $7.33 per kWh, benefiting from its abundant natural resources that contribute to lower electricity costs. Oklahoma follows closely with a rate of $9.00 per kWh, indicating the advantage of resource-rich states in offering cheaper electricity.
Regional Consistency: The data reflect regional patterns in commercial electricity rates. New England states, including Connecticut ($19.28), Maine ($18.61), Massachusetts, New Hampshire ($19.45), Rhode Island ($19.31), and Vermont ($18.43), are among those with higher rates, which is consistent with regional trends observed in previous analyses. Conversely, states in the West North Central region, like North Dakota, and the West South Central region, such as Oklahoma and Texas ($8.76), generally feature lower rates.
Variations: The spectrum of rates ranges significantly, from $7.33 per kWh in North Dakota to $40.63 per kWh in Hawaii. This variation highlights the influence of local variables, including the availability of energy resources, the state of the infrastructure, and specific state policies on energy, on the cost of commercial electricity.
Comparison with U.S. Average: The national average commercial electricity rate in November 2023 stands at $13.05 per kWh. The data show a near even split among states with rates below and above this average, illustrating a diverse landscape of electricity costs across the United States. This distribution reflects the varying economic, geographical, and policy-driven factors that influence energy pricing in different regions.
Regional Commerce Electricity Rates – 2024
The table provided below 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:
| State | Commercial Rate in $ / kWh |
| Middle Atlantic | $15.23 |
| East North Central | $11.97 |
| West North Central | $9.90 |
| South Atlantic | $10.95 |
| District of Columbia | $16.46 |
| East South Central | $12.07 |
| West South Central | $9.06 |
| Mountain | $10.86 |
| Pacific Contiguous | $19.32 |
| Pacific Noncontiguous | 31.11 |
Regional Variations: The commercial electricity rates across regions exhibit a notable range, from as low as $9.06 per kWh in the West South Central to as high as $31.11 per kWh in the Pacific Noncontiguous region. This variation underscores the impact of geographic, economic, and policy factors on electricity pricing.
Highest Rates: The Pacific Noncontiguous region, encompassing areas such as Hawaii and Alaska, reports the highest rate at $31.11 per kWh, likely due to the logistical complexities of energy supply and the push for renewable energy sources in these remote areas. The Pacific Contiguous region follows with $19.32 per kWh, reflecting the high demand and environmental regulatory costs prevalent in states like California, Oregon, and Washington.
Lowest Rates: The West South Central region enjoys the lowest commercial electricity rate at $9.06 per kWh, benefitting from abundant natural resources and favorable energy production capacities. The West North Central region also reports low rates at $9.90 per kWh, indicating efficient energy production and utilization practices.
High Costs in Urban Centers: The District of Columbia stands out with a rate of $16.46 per kWh, illustrating the higher costs associated with densely populated urban areas, despite its smaller geographical size.
Comparison with National Averages: These regional rates reflect the diverse energy landscapes across the United States. The differences between regions highlight the importance of local resources, infrastructure, and policy in determining electricity costs.
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.
