Here’s an energy paradox: “Some states have low electricity prices but residents pay more to power their homes, and others have high prices and low consumer bills. But the occurrence of high prices paired with high bills is rare,” noted Bloomberg News reporters.
An example: “In 2019, the average monthly electricity bill for residential customers in the United States was 1.8% lower than it had been in 2018, down from $118 to $115 per month,” said the US Energy Information Agency in December 2020. Its data is below.
Several factors affect this balancing act of electric rates versus bills.
Different states have different electric rates. However, rates don’t dictate the amount of energy used. “Where we live and how much energy we use are a big part of the equation. For instance, although electricity is relatively cheaper in Southern Louisiana, its scorching summer heat raises costs for residents compared with the temperate climate in more energy-expensive Northern California, where heating and cooling units stay idle most of the year,” says WalletHub, a website that examines personal money management. South Carolina is among the highest bills in the nation according to the US Energy Information Agency (in the Bloomberg story). (Energy Information Agency figures, as mapped by the U.S. Chamber, are here.)
“High bills” are relative, too. People with higher incomes are likely to pay less of a percentage of their income on energy. Poorer customers often pay a larger percentage of their monthly budget on energy. “In the U.S., energy costs [not just electric] eat between 5 and 22 percent of families’ total after-tax income, with the poorest Americans, or 25 million households, paying the highest of that range. And lower energy prices don’t necessarily equate to savings,” says WalletHub. If finances are a challenge, home-owners have more of a challenge to cover the bills, and are less likely to invest in energy-efficiency.
Low electric rates may not equal lower bills. Energy efficiency can lower bills and efficiency costs money. New technologies or improvements cost money. Wealthier people can afford efficiency more than poorer citizens. Less efficient homes pay more per square foot for heating or cooling, so even a smaller home can be more energy intensive.
Non-urban locations can also use more energy. A US News and World Report story says, “Rural homes are more likely to have a number of traits that mean they use more energy or are less energy efficient. They tend to be older on average than urban homes: While the national average age of occupied housing is 37 years old, according to data from the American Community Survey, the average age of a rural housing unit is 45 years old.”
The US News story also says, “These challenges can be more severe in mobile homes, 70 percent of which are in rural areas. Although manufactured homes tend to be smaller and use 35 percent less energy than site-built houses, they use 70 percent more energy per square foot.”
Bloomberg sums up the issue well: “In other words, a state’s low rate won’t necessarily make your electricity cheap. With electricity prices flat in most markets, efficiency measures that reduce consumption are a far easier way to lower power bills. Insulating homes, swapping incandescent bulbs for LEDs, and replacing aging appliances all reduce the energy needed for people to live at the same (or better) standard.”
This look at energy rates versus energy bills shows that the issue is complex and requires thorough discussion about costs, diverse energy supplies, usage and efficiency. That also means that smart and respectful dialogue has to happen among consumers, regulators, utility companies, builders, and a range of other stakeholders who can help us use energy wisely and save consumers money.