Jake Morabito, director of the American Legislative Exchange Council's (ALEC) Energy, Environment, and Agriculture Task Force, says the annual Energy Affordability Report calculates the average electricity prices in a state by measuring the residential, commercial, industrial, and transportation electrical costs.
That, he says, is an easy way to measure how affordable energy is in a state.
Removing Hawaii (50th) and Alaska (45th) from the equation – what Morabito calls "special case" states because of their geographic location – the states with highest electricity prices are California, Massachusetts, Connecticut, and New Hampshire.
"What's in common is that all those states have chosen over the years to enact strict polices that make it harder for businesses to create electricity and expand electricity capacity," Morabito explains. "This can be done through policies such as a renewable portfolio standard, which essentially dictates X percent of the state's capacity has to come from renewables, artificially raising the price of electricity to meet that goal."
Those states also have cap and trade programs or belong to something like the Regional Greenhouse Gas Initiative (RGGI), which, again, Morabito thinks makes electricity more expensive to produce.
These states also have net metering rules, which are designed to incentivize rooftop solar and other renewables but actually end up making electricity more expensive for average rate payers.
The five states that have the cheapest electricity are Wyoming, North Dakota, Idaho, Utah, and Nebraska.
"They have embraced a more market driven approach and use a very diverse set of generations," the ALEC spokesman relays. "Instead of only relying on one source, they might use natural gas; they might use solar and wind when it makes sense, but they allow the marketplace to compete openly."
Morabito says that allows prices to fall and ultimately benefits consumers, makes it easier for families and businesses to have the generation they need to power their homes, power their businesses, commute to work, and just improve their lives.
