Commercial Vs Residential Electricity Rates Across the US – 2024

Introduction – Commercial vs. Residential Electricity Rates

Are you interested in commercial vs. residential electricity rates? There’s also “industrial” electricity rates that are in a different class. Combined, commercial and industrial electricity rates comprise business electricity rates. Residential rates are generally higher, but there’s considerable variation by state and the odd states where the relationships are inverted.

[Update: data is up-to-date as of Jan 2024, which reports on Oct 2023 rates at the EIA here]

The average electricity prices across the United States for each sector are as follows:

• Residential Sector: The average price is approximately 17.08 cents per kWh.
• Commercial Sector: The average price is around 13.10 cents per kWh.
• Industrial Sector: The average price is about 9.47 cents per kWh.

These averages suggest that residential consumers typically pay the highest electricity rates, followed by commercial users, with industrial consumers enjoying the lowest rates on average.

Sector	Electricity Rate (cents / kWh)
Residential	17.08 cents / kWh
Commercial	13.10 cents / kWh
Industrial	9.47 cents / kWh

Electricity is a crucial part of our daily lives, powering everything from our homes to our businesses. This article provides an in-depth look at these differences and what they mean for consumers and businesses.

Analysis of Residential And Business Electricity Rates Across the US

Let’s delve into some data from the Energy Information Administration (EIA) that illustrates these differences. We obtained the monthly EIA data for electricity rates, stratified by sector and states.

The following table lists the average cost of electricity in cents per kilowatt-hour (kWh) for residential, commercial, and industrial (the two comprising business) consumers in each state, as well as the national average:

State	Residential (cents/kWh)	Commercial (cents/kWh)	Industrial (cents/kWh)
Alabama	15.02	13.16	7.25
Alaska	23.98	20.7	17.97
Arizona	14.52	11.73	7.61
Arkansas	12.71	10.58	6.92
California	26.72	24.47	20.41
Colorado	14.54	11.5	8.42
Connecticut	28.95	19.84	15.56
Delaware	17.46	11.88	7.58
Florida	15.48	11.82	9.29
Georgia	13.75	11.39	6.39
Hawaii	42.69	39.33	35.13
Idaho	12.15	9.22	6.77
Illinois	15.83	11.27	8.56
Indiana	15.17	12.12	7.93
Iowa	13.37	9.74	6.2
Kansas	13.72	10.97	7.7
Kentucky	12.99	11.4	6.53
Louisiana	11.92	10.42	5.81
Maine	29.13	17.78	12.99
Maryland	18.4	12.55	10.29
Massachusetts	28.02	19.14	17.21
Michigan	19.06	13.41	8.36
Minnesota	15.29	12.33	9.32
Mississippi	13.67	12.21	7.06
Missouri	12.42	9.41	7.48
Montana	12.96	12.36	8.42
Nebraska	11.76	9.01	7.03
Nevada	14.63	10.45	7.95
New Hampshire	25.76	19.13	15.23
New Jersey	17.51	13.73	11.42
New Mexico	14.5	11.09	6.13
New York	22.7	18.82	6.46
North Carolina	14.75	10.58	7.54
North Dakota	11.66	7.48	7.09
Ohio	16.01	10.98	7.17
Oklahoma	13.27	9.51	6.13
Oregon	13.24	10.22	7.08
Pennsylvania	18.43	11.1	7.67
Rhode Island	31.78	19.82	18.84
South Carolina	14.47	10.25	6.63
South Dakota	12.99	10.23	8.08
Tennessee	12.57	11.6	6.3
Texas	14.71	9.1	6.72
Utah	11.22	8.74	7.38
Vermont	22.11	18.84	11.37
Virginia	14.27	9.11	8.67
Washington	11.34	10.34	6.53
West Virginia	15.07	11.49	7.48
Wisconsin	17.05	12.69	8.37
Wyoming	12.47	10.21	7.05
USA (average)	17.08	13.1	9.47

Residential Sector

• Highest Prices: The states with the highest electricity prices in the residential sector are Hawaii, Connecticut, Rhode Island, California, and Massachusetts, all exceeding 25 cents per kWh. This could be due to factors like higher cost of living, state-level energy policies, or reliance on imported energy sources.
• Lowest Prices: On the other end, states like Louisiana, Washington, Arkansas, and Idaho have the lowest residential electricity prices, all below 13 cents per kWh. These states might benefit from abundant local energy resources or efficient energy production.

Commercial Sector

• Highest Prices: Hawaii, Rhode Island, California, Connecticut, and Vermont lead with the highest commercial electricity prices. The trend is similar to the residential sector, indicating that the factors affecting prices might be consistent across sectors.
• Lowest Prices: States like Louisiana, Washington, Idaho, and Nevada offer the lowest prices for commercial electricity. The presence of hydroelectric power in states like Washington and Idaho could be a contributing factor to their lower prices.

Industrial Sector

• Highest Prices: Hawaii, Rhode Island, California, and Massachusetts have the highest industrial electricity prices. Hawaii’s particularly high prices across all sectors could be due to its isolated location and reliance on imported fuels.
• Lowest Prices: Washington, Louisiana, Idaho, and Arkansas have the lowest industrial electricity prices. The presence of cost-effective energy sources like hydroelectric power in Washington and Idaho plays a significant role here.

Nationwide Trends

• Variation: There is a significant variation in electricity prices across states and sectors. The industrial sector generally enjoys the lowest prices, likely due to economies of scale and possibly more stable demand patterns.
• Geographical Factors: Geographical and regional factors greatly influence electricity prices. States with access to abundant natural resources for power generation, like hydroelectric or natural gas, tend to have lower prices.
• Policy Impact: State energy policies, including renewable energy mandates and other regulations, can also impact electricity prices.

On our website we publish commercial electricity rates that are more up-to-date than the table above.

Deep Dive: Residential Electricity Rates

In October 2023, the average residential electricity rate across the U.S. is 16.79 ¢/kWh, with a noticeable spread indicated by a standard deviation of 6.04 ¢/kWh. The distribution is positively skewed, as evidenced by a mean that is higher than the median of 14.47 ¢/kWh.

A substantial range of 29.06 ¢/kWh highlights the disparity in rates among states. Hawaii has the highest rate, a consequence of its dependence on imported oil for electricity. Conversely, Washington State enjoys the lowest rates due to its access to abundant hydroelectric power.

The middle 50% of the rates, represented by an interquartile range of 4.66 ¢/kWh, shows a more moderate variability in costs compared to the overall range. This data underscores significant state-to-state variations influenced by factors including energy sources and policies.

Deep Dive: Commercial Electricity Rates

In 2023, the average commercial electricity rate in the U.S. is 13.18 ¢/kWh. The data exhibits a positive skew, with a standard deviation of 4.89 ¢/kWh showcasing the variation among states.

The range in commercial electricity rates is 28.03 ¢/kWh. Hawaii tops the chart with the highest rates due to its import-reliant energy supply. North Dakota, on the other hand, enjoys the lowest rates.

The interquartile range, standing at 2.73 ¢/kWh, indicates a more compact distribution for the central half of the states, reflecting less variability compared to the overall spread of rates across the country.

Deep Dive: Industrial Electricity Rates

The average industrial electricity rate in the U.S. in 2023 is 9.75 ¢/kWh, with a standard deviation of 4.61 ¢/kWh indicating variability among states. The distribution is positively skewed, as the mean is higher than the median of 8.23 ¢/kWh.

The rates span a range of 25.89 ¢/kWh, with Hawaii having the highest and Louisiana the lowest industrial electricity rates. The interquartile range is 2.19 ¢/kWh, showing less variability in the middle 50% of the data compared to the entire dataset.

Understanding the Basics

A kilowatt-hour (kWh) is a unit of energy that represents the amount of electricity consumed over time. Residential, commercial, and industrial rates are the prices that these respective types of consumers pay for electricity per kWh.

These rates differ due to factors like the quantity of electricity used, the cost of delivery, and the time of use, with larger consumers like businesses and industrial entities often paying less per kWh due to economies of scale.

The alternative upfront payment scheme for electricity in deregulated states will affect costs as well.

Electricity Rates Vary For A Few Major Reasons

Electricity rates vary significantly across states due to a range of factors. For instance, states with abundant renewable resources such as Washington and Idaho, which benefit from significant hydroelectric power, tend to have lower electricity rates. On the other hand, Hawaii, which is geographically isolated and depends heavily on imported fuels for power generation, has the highest rates across all sectors.

Similarly, California’s rates are influenced by its commitment to renewable energy and the associated infrastructure and regulatory costs. Areas with a high population density, like the District of Columbia, can spread the fixed costs of the infrastructure across many users, potentially leading to lower prices per unit of electricity.

In this particular case, a large amount of commercial activity in the area may also drive prices higher. The blend of these and other factors creates the complex landscape of electricity pricing we observe across the United States.

Conclusion – Commercial vs. Residential Electricity Rates

In conclusion, while the national trend shows residential electricity rates are generally higher than commercial and industrial rates, there are exceptions and variations across different states. Factors such as the mix of energy sources, local regulations, the level of competition among providers, and infrastructure costs all contribute to these differences.

Being informed about these rates can help consumers and businesses make more cost-effective decisions. It’s also a step towards a broader understanding of energy economics in the United States.

Understanding the differences in residential, commercial, and industrial electricity rates can be enlightening. Whether you’re considering a move to a new state or planning to start a business, being aware of these rates can help inform your decision-making process.

Remember, these are averages and actual costs can vary based on specific circumstances, so it’s always worth doing additional research to get a full picture of potential electricity costs.

References

Data was sourced from the Energy Information Administration (EIA). For further reading and more detailed data, visit the EIA’s official website.