
Recently, my LinkedIn feed has been filled with conversations about the cost of electricity, likely due to the noticeable surge in price. Most include a graphic and many include dated or erroneous/suspicious information. I don’t think people are being malicious, this is a complex topic and the supportive data is equally fraught with confusion.
Energy vs. Electricity
When a point is being made about energy consumption that does not necessarily mean electricity. If you look at the US energy Information Administration (EIA,) energy is defined as electricity, natural gas and heating oil and propane. Some statistics even include the cost of gasoline and diesel fuel because it is energy we consume. Even more broadly, we could include the cost of coal, hydropower, solar, wind, geothermal, biomass, ethanol and uranium because they are used in the creation of electricity. None of these are wrong observations, but what information is right for a viable assessment of cost and cost savings?
As lighting people, we can’t really impact home heating and gasoline has little bearing on watts consumed to illuminate a space. The cost of coal, hydro or nuclear power are baked into our price per kilowatt-hour of electricity. That said, it might be easy for us to home in on the price of electricity, but that too, is complex.
The Different Prices for Electricity
Electric companies across the United States sell electricity at different rates to different entities. There are residential, commercial, transportation and manufacturing rates. There is also a combined average. If you are like me and have spent a career concentration on residential lighting, the residential price per kilowatt-hour is all that you need. Commercial lighting people will need the commercial and industrial (manufacturing) numbers to help aid in justifications.
States, Regions and National
Data is collected across states; states are accumulated into regions and a national average is finally calculated. All those numbers are made available and by themselves, are correct. So which do you use?
It is important to note that the price of electricity varies wildly across the nation. Hawaii is always the highest in the country, the Northeast corridor typically makes up the remainder of the “Top10” with Alaska and California also in that top ranking. The least expensive electricity seems to change each year from the bottom ten states. That means the national average should be considered just that, an average.
2024 Stats
(A note, about EIA stats. Yearly numbers take a few months to accumulate. The 2025 averages will likely be published sometime mid-year to the third quarter. For that reason, most people will be using the 2024 number for the next few months.)
The average price for electricity to the ultimate residential customer in 2024 was 16.48¢/kWh. For the commercial businesses, 12.75¢/kWh, Industry paid 8.13¢/kWh and the transportation sector price was also12.75¢/kWh. Across all four sectors, the average was 12.94¢/kWh.
https://www.eia.gov/electricity/annual/table.php?t=epa_02_04.html
To understand the wide variation of prices, the EIA breaks the data down. In 2024, Hawaii, of course had the most expensive residential electricity in the nation at 42.86¢/kWh and North Dakota enjoyed the least expensive electric cost of 11.51¢/kWh, almost four times less. The commercial, industrial and transportation sectors, by and large, fall into similar proportional rankings.
https://www.eia.gov/electricity/annual/table.php?t=epa_02_10.html
Hawaii is the most expensive because it is an island-state. It must generate all of its electricity on the islands. Buying or selling excess production is not possible, hence the high prices. Alaska also finds itself in the same position for the same reason. Within the contiguous United States, high prices are borne by densely populated areas and low prices are enjoyed in sparsely populated states. For that reason, California, New England states and New York comprise the list of the most expensive contiguous states.
The cheapest electric rates have a few anomalies. Washington is always on the list, because of the large amount of hydro generated power. Tennessee is also a constant primarily because of the TVA. The other states have smaller and more rural population, in general.
Twenty Years
I have been talking about electrical consumption for over twenty years. To help designers, lighting professionals and consumers understand the benefits of energy efficient lighting, first fluorescent, then LED, I talked about the long-term or lifecycle cost of lighting. To give people a better understanding of the financial reality, we looked at first cost PLUS the cost of electricity over the lifespan of the luminaire, knowing full well, electricity would increase.
When I first started delivering talks on lighting energy consumption, the 2004 national average cost of electricity was 8.95¢ per kWh. That means the average cost of residential electricity has increased 84.8% in twenty years! Has your salary increased 84% in that time? If not, more of your discretionary dollars are being used for non-discretionary needs.
As I began my research, I remember reading that electric cost had not really experiences huge jumps in the decades prior to 2004. Later, listening to a speech given by the CEO of ComEd, I learned that those rates were stable primarily because the market was continuing to grow. In the early 2000s, growth was difficult and even impossible. Fewer households were being formed, it was getting very difficult, almost impossible to build a new power plant and because of age, the power infrastructure was in dire need of replacement. She promised at the time, “Rates will/must go up.” Today, we are hearing that electric rates are rising primarily because of the massive draw required by data companies to facilitate Artificial Intelligence (AI.) To undertake this massive level of computer processing a lot of electricity is used. What’s more, it takes a lot of electricity in a country where almost no added electric creation is being built. No new output with substantial new demand and only limited ways to increase efficiency do not make for a good future. The short prognosis must be, rapidly increasing electric rates. Aren’t you glad the federal government cancelled all those wind and solar energy creation initiatives? (Sarcasm implied.)
But there is one more wrinkle, PUCs. Public Utility Commissions regulate the electric rates for regions and states. Because they are political organizations they may be resistance to increase rates commensurate with demand and reality. If that becomes the case, then expect electric reliability to fade. When the money is not available, maintenance is the first thing to suffer. Our 100 year old electrical infrastructure is in poor health. Things will break. Users have a horrible choice ahead of us, pay more for electricity or assume outages as a typical way of life. Sorry for the Sophie’s Choice, but this also explains the increased introduction of resilient lighting product.
I’m actually very pessimistic as we enter the second quarter of this century. America was finally looking at energy creation alternatives, but the Luddite community persevered. Even if we make substantial changes to our government makeup, progressive initiatives do not just restart in an instant. All this occurred while China continues to decommission coal power plants and increase non-fossil fuel alternatives. We could quickly enter a time with rapidly increased electric cost for a supply that is unreliable. I’m not sure I like that prognosis.
PS: To my Canadian friends and readers, SORRY, I have not done twenty years of research on Canadian rates, but I do know that Canadian utility companies have been far more proactive than US concerns. Hopefully you’re not in the same boat!
If you want the best information available on energy, check out the US federal government’s excellent resource, The Energy Information Administration:



































