Electricity Prices

Electricity prices vary over different regions based on the areas access to sources of fuel, construction and maintenance costs of power plants, the maintenance expenses of the local electricity grid, weather conditions, and the local governments regulations.  Electricity rates tend to be higher in the summer due to higher demand requirements.

The price that consumers pay on the generation side depends on both the KWh usage and the KW demand.  Kilowatt hours (KWh) is the measurement of how much electricity and customer consumes, while Kilowatt (KW) demand is how much power a facility requires at any given time.  Much of what we hear about improving the grid infrastructure or improving a buildings energy efficiency has to do with improving KW efficiency.  If we know exactly how much electricity every building needs at every moment, we can greatly reduce electricity prices.

Prices are usually highest for residential and commercial consumers because it costs more to distribute electricity to them. Industrial consumers also use more and can take their electricity at higher voltages so it does not need to be stepped down. These factors make the price of power to industrial customers closer to the wholesale price of electricity.

The average retail price of electricity in the United States in 2008 was 9.74 cents per kilowatt-hour (kWh). The average prices by type of utility customer were:

  • Residential: 11.3¢ per kWh
  • Transportation: 10.7¢ per kWh
  • Commercial: 10.4¢ per kWh
  • Industrial: 6.8¢ per kWh