Study: Home Energy Costs By State, 2024
Electric and Natural Gas Utilities Passing Higher Costs to Consumers
One common consumer headache this year has been the number of utilities filing to increase their rates. While some are quick to blame rising energy costs on the shift away from fossil fuels, an important statistic and a quick look at the average monthly power bill should show otherwise. In its August 2024 electric bills study, Texas Electricity Ratings found that US electric utility rates rose nationally by an average of 23.2%. Consumers are now paying higher utility rates for grid upgrades and expansions. According to the EIA, about 65% of an average monthly utility bill goes to utility distribution costs. These include the cost to maintain and improve the local grid, the cost to deliver energy, and the rate of return on investment that state commissions allow investor owned utilities.
Investor owned utilities provide power to 57% of the US electricity market. On the gas side of things, about 72% of gas utilities are investor owned. From 2000 to 2019, utility spending on their distribution networks (both pipes and wires) increased by 64%. The energy industry analyst Deloitte forecasts that electric utilities alone could spend well over $1.8 trillion in the next seven years to maintain, operate, and decarbonize the US electric grid.
And consumers can expect to see those costs passed on them in their monthly bills.
Home Energy Costs by State in 2024
Electric utility rates have risen on average by about 21% and natural gas has increased by 23% over the past 10 years.
Our analysis shows that during the past 10 years utility rates for both electricity and natural gas have increased on average by about 21% and 23%, respectively. True, different states have different rules, resources, and face different challenges that affect prices in their energy markets. However, we're seeing here how the utility sector's response to the economics of climate change is showing up on consumer's monthly bills.
Upgrades, Retrofits, and Repairs
Natural gas powers about 41% of the nation's power plants. That's the most of any single fuel source. According to EIA data, US natural gas supply has largely stayed on top of demand for much of the past year. The EIA reports that current supplies for powering generators and heating homes have been above the five year maximum average since January, 2024. So, there's no shortage of the stuff to make energy in the US. Electricity rates in Texas show that supply prices are some of the lowest in the US. According to GeorgiaGasSavings.com, gas customers have been shopping some of the lowest supply rates in years.
However, moving all that energy from where it's made to where it's needed is a different story for consumers.
Problems facing US Natural Gas Utilities
- States that don't produce natural gas will pay more to pipeline companies to bring gas to them. Over 100 interstate and intrastate pipeline projects were either announced or under construction in January, 2024. These projects involve large diameter pipes; from 6" to 48". In March, 2024, the EIA reported that the US added intrastate pipeline projects rated to 5.2 billion cubic feet per in capacity.
- Gas utilities are retrofitting leaky connections and replacing old pipes and upgrading connections within their local service areas. This not only includes old iron piping but also defective 1970s plastic piping.
- Severe weather and pipeline bottlenecks: High demand during extreme cold can reduce the volume of gas in a utility's pipeline network to the point where there's not enough pressure to push the gas. Similarly, water vapor in natural gas itself can freeze into blockages or shut down compressors that maintain pressure.
- Going Green: Natural gas utilities are losing customers electric home heating systems which offer greener and more energy efficient alternatives. This leaves fewer customers to cover the natural gas utility's operating costs.
Problems Facing the US Power Grid
- Kicking the Can: Some local electric utilities have put off making many repairs and upgrades to their aging infrastructures for years. And this even includes minor maintenance chores like tree pruning. Now, with rising demand, utilities can no longer afford to delay fixing poles, re-hanging wires, and pruning trees. But now they're also paying more to do all those jobs.
- Strong Storm Damage: Due to climate change, consumers are seeing more severe weather events and power outages. So, it's becoming common for power companies will ask state utility commissions to pass damage costs onto customers in riders or surcharges.
- Demand: Over the past ten years, the amount of electricity per household has fallen. For example, in 2014 an average residence consumed 911 kWh per month. By 2022, usage has fallen by an average of 12 kWh to 899 kWh. However, the number of households has increased from 122.46 million in 2013 to 131.43 million in 2023. Likewise, development of datacenters and cryptocurrency mines has reawakened the need for round-the-clock baseload power generation.
- More Transmission Capacity: Building or upgrading power lines to be able to handle more demand is expensive. For example, a 69 kV single circuit power in 2004 cost $285,000 per mile. Now, in 2024, that cost has risen to $473,314.
How Electricity Costs Compare
| Most Expensive | Least Expensive |
|---|---|
| Hawaii* | Louisiana |
| California | Utah |
| Massachusetts | Idaho |
| Rhode Island | Washington |
| Connecticut | Arkansas |
| Alaska* | Oklahoma |
| New York | Tennessee |
| New Hampshire | Kentucky |
| Maine | Wyoming |
| Vermont | Nebraska |
The New England states (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont) have some of the highest electricity prices in the continental US. The reason is the region's dependence on pipelines to bring natural gas to supply its generators. New England consumers there are painfully aware that any disruption that could shut down one pipeline can raise energy costs throughout the region. For that reason, lawmakers are seeking ways to break away from natural gas.
Similarly, California faces higher electricity prices for its reliance on natural gas fueled electricity as well. The state produces little of its own and must also import power from neighboring states.
*Note here that Alaska and Hawaii are special cases. Neither are connected to the rest of the US grid system and are composed of smaller, separate grids. Hawaii currently depends on ships to bring in fuel to power its generators and bring in natural gas. Each island must also power and operate its own grid. Likewise, Alaska is composed of several separate and independent grids. Plus, Alaska experiences far more severe winter conditions for longer periods than the rest of the US.
How Natural Gas Costs Compare
| Most Expensive | Least Expensive |
|---|---|
| Hawaii | Montana |
| Georgia | New Mexico |
| West Virginia | Idaho |
| Florida | Ohio |
| Missouri | South Dakota |
| Texas ** | Alaska |
| Kentucky | Tennessee |
| Arizona | Minnesota |
| Oklahoma** | Utah |
| South Carolina | Wisconsin |
For the most part, states that don't produce natural gas will pay more for pipeline companies to bring gas to them and spread it throughout their state. Prime examples here are Georgia and Florida. West Virginia, a major gas producer, however, has a recent history of passing on surcharges and recovery costs from natural gas utilities to customers.
** Texas and Oklahoma are special cases here. As two of the biggest natural gas producing states, they can supply themselves with all the gas they need. So, their intrastate pipelines companies are not covered by federal regulations. There are no statutory limits on prices these pipeline companies can charge consumers.
Methodology
Residential price per kilowatt hours was gathered from EIA Electricity Monthly report for June 2024 from Table 5.6.A. Average Price of Electricity to Ultimate Customers by End-Use Sector.
We then gathered monthly natural gas delivered prices for residential customers for June 2024 from EIA's Data Series for Natural Gas prices. EIA shows its natural gas delivered prices in thousand cubic feet (MCF). But because rates in most states are in hundred cubic feet (ccf), we converted EIA's prices to reflect the more common rate.
Note: Most utility customers receive bills that bundle the energy supply charge with distribution charges. By subtracting 65% from the average rates shown, consumers can get a reasonably approximate amount showing how much they are paying for these two charges.
Sources
EIA Electricity Monthly, June 2024, Table 5.6.A., Average Price of Electricity to Ultimate Customers by End-Use Sector
https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=table_5_06_a
EIA Data Series for Natural Gas prices, Price of Natural Gas Delivered to Residential Consumers (Dollars per Thousand Cubic Feet MCF)
https://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_m.htm