Most & Least Energy Expensive States

by John S Kiernan

WH-Best-Badges-150x150-2Americans will be wiping sweat off their foreheads this month, so get ready to crank up those air conditioners. July tends to be the hottest month of the year in the contiguous U.S., and as a result it has the highest energy consumption. With mercury rising, consumers can expect the heat to drain not only their energy supply but also their wallets.

In the United States, 7.1 percent of the average consumer’s total income is spent on energy costs, including fuel, natural gas and electricity. And during the summer, when many Americans undergo major life transitions such as relocating to start a new job or start a family, the difference in energy costs among states becomes an important financial consideration.

Keep in mind that lower prices don’t always equate with lower costs, as consumption is a key determinant in the total amount of an energy bill. In places with scorching summer weather but cheaper electricity like Southern Louisiana, households might end up with higher out-of-pocket costs than those in energy-expensive Northern California, where the temperate climate keeps heating and cooling units idle most of the year.

To help consumers make an informed decision, WalletHub has identified the Most & Least Energy-Expensive States. We used six key metrics to rank the states according to their tendency to produce the highest or lowest monthly energy bills. By doing so, consumers living in or planning to move to states with the steepest energy costs can effectively minimize their expenses while staying cool under the sun. Check out the Methodology section below for more detailed information on how we ranked each state.

Main Findings

 

Overall Rank

State

Total Energy Cost

Monthly Electricity Cost
(Rank)

Monthly Natural Gas Cost
(Rank)

Monthly Fuel Cost
(Rank)

1 Colorado $301 $83
(5)
$48
(17)
$171
(18)
2 Washington $302 $90
(8)
$63
(37)
$149
(6)
3 Montana $305 $83
(6)
$54
(25)
$168
(16)
4 Rhode Island $307 $101
(22)
$79
(42)
$127
(3)
5 Nebraska $312 $95
(15)
$45
(16)
$173
(21)
6 District of Columbia $314 $91
(9)
$97
(49)
$125
(2)
7 Pennsylvania $317 $109
(28)
$68
(39)
$140
(4)
8 Arkansas $319 $101
(23)
$36
(5)
$182
(30)
9 Delaware $319 $115
(34)
$55
(27)
$149
(5)
10 Iowa $319 $96
(17)
$57
(29)
$166
(13)
11 New Jersey $324 $110
(31)
$58
(30)
$156
(9)
12 Illinois $327 $82
(3)
$85
(45)
$159
(10)
13 California $327 $91
(10)
$44
(13)
$192
(36)
14 Oregon $328 $97
(19)
$61
(34)
$169
(17)
15 South Dakota $328 $96
(18)
$52
(23)
$180
(29)
16 Kansas $331 $111
(32)
$48
(18)
$173
(22)
17 Idaho $332 $92
(11)
$50
(20)
$190
(33)
18 Missouri $332 $104
(25)
$44
(14)
$184
(31)
19 Indiana $333 $109
(30)
$52
(22)
$171
(19)
20 Michigan $335 $96
(16)
$61
(35)
$178
(28)
21 Ohio $335 $103
(24)
$57
(28)
$175
(26)
22 Arizona $336 $120
(38)
$45
(15)
$171
(20)
23 Louisiana $341 $115
(35)
$27
(1)
$199
(37)
24 Wisconsin $345 $94
(12)
$77
(40)
$174
(23)
25 Utah $346 $83
(4)
$59
(33)
$204
(40)
26 New Hampshire $347 $107
(26)
$86
(46)
$155
(8)
27 Florida $348 $128
(43)
$30
(2)
$190
(34)
28 Vermont $348 $98
(20)
$82
(44)
$168
(15)
29 New Mexico $349 $76
(1)
$49
(19)
$224
(46)
30 Virginia $352 $118
(36)
$59
(32)
$174
(24)
31 South Carolina $352 $137
(48)
$37
(7)
$178
(27)
32 Maine $353 $81
(2)
$86
(47)
$186
(32)
33 Tennessee $359 $129
(44)
$40
(8)
$191
(35)
34 Minnesota $359 $94
(13)
$58
(31)
$207
(42)
35 Massachusetts $363 $109
(27)
$104
(50)
$151
(7)
36 Kentucky $364 $113
(33)
$44
(12)
$207
(41)
37 North Carolina $364 $119
(37)
$42
(11)
$203
(39)
38 New York $365 $126
(42)
$80
(43)
$160
(11)
39 Nevada $368 $125
(41)
$41
(10)
$202
(38)
40 Maryland $377 $136
(46)
$65
(38)
$175
(25)
41 North Dakota $378 $94
(14)
$55
(26)
$228
(47)
42 Texas $381 $137
(47)
$32
(3)
$212
(43)
43 Alaska $382 $122
(39)
$137
(51)
$123
(1)
44 Wyoming $383 $87
(7)
$52
(24)
$244
(49)
45 West Virginia $386 $100
(21)
$51
(21)
$235
(48)
46 Alabama $392 $138
(49)
$41
(9)
$213
(44)
47 Oklahoma $401 $109
(29)
$36
(6)
$255
(51)
48 Georgia $403 $123
(40)
$63
(36)
$217
(45)
49 Connecticut $404 $143
(50)
$94
(48)
$167
(14)
50 Mississippi $414 $135
(45)
$32
(4)
$247
(50)
51 Hawaii $451 $209
(51)
$78
(41)
$163
(12)

Most_Least_Energy_Expensive_States_070814

Ask the Experts

< >
  • Charles A. Hall Professor Emeritus, State University of New York College of Environmental Science and Forestry
  • Jonathan Koomey Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance, Stanford University, Author of 'Cold Cash, Cool Climate: Science-Based Advice for Ecological Entrepreneurs'
  • Timothy Considine SER Professor of Economics, Center for Energy Economics & Public Policy at University of Wyoming
  • Joseph K. Goodman Associate Professor of Marketing, Olin Business School, Washington University in St. Louis
  • Laura Lamontagne Assistant Professor of Economics, Christopher Newport University
  • Victor A. Matheson Professor of Economics, College of the Holy Cross
  • Kenneth Gillingham Assistant Professor of Economics, Yale University

Charles A. Hall

Professor Emeritus, State University of New York College of Environmental Science and Forestry
Charles A. Hall
What are some good tips for saving on energy bills?

Well, you need to include direct (gasoline, electric bill) and indirect (the substantial amount of energy used to make all goods and services). So the best way is to spend less money, the next best is to have fewer or no children.

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

Efficiency is no guarantee, because of Jevon's paradox: people drive more fuel efficient cars more miles, air condition more space with more efficient air conditioners etc. In Sweden people who ate a less energy intensive diet saved money and went on longer vacations, using more energy over the year.

Do you believe states should extend their Low-Income Energy Programs?

Yes, and pay for that by taxing more heavily the excessive consumption of the wealthy so the net impact is energy neutral.

Jonathan Koomey

Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance, Stanford University, Author of 'Cold Cash, Cool Climate: Science-Based Advice for Ecological Entrepreneurs'
Jonathan Koomey
What are some good tips for saving on energy bills?

Highest priorities for saving energy in the home:

1) Install more ceiling insulation. It's relatively inexpensive (especially if you do it yourself) and it will save money and keep you warmer in winter and cooler in summer.

2) When buying new appliances and windows always look for the ENERGY STAR label. ENERGY STAR devices save money and prevent pollution. Most will pay for themselves quickly, and all will pay for themselves eventually. You can use the Top Ten site to find the most efficient products, which often qualify for utility rebates.

3) Install low-flow shower heads and put an insulating blanket on your water heater. The shower heads also save water, which is a big deal here in the west (and should be a big deal everywhere).

4) Replace incandescent bulbs (especially those that operate three or more hours per day) with new LED bulbs. Shop around, but the light quality is now quite good, and prices keep coming down. Buy from major manufacturers to avoid reliability problems.

5) Put coatings on your windows to block heat in warm climates. These coatings can transmit most of the visible light while blocking ultraviolet and infrared radiation (which together represent half the heat in sunlight). If buying new windows, always go for the right low emissivity coating and argon gas fill (the incremental cost is small and the savings substantial).

6) Make your roof white to reflect the heat.

7) If your electricity bills are more than $100/month, you can install solar panels for no money down and have your total energy bills go down. It still makes sense to do efficiency first, because it's the cheapest thing to do, but solar is now quite cost effective for homeowners. Fun fact: the price per watt of solar panels has fallen 80% in the past 6 years!

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

Tax credits: I think tax credits are one good way to promote energy efficiency, but there are many others. Utilities give rebates for purchase of efficient products. Governments mandate certain efficiency levels in the marketplace. Large institutions mandate purchases of only the most efficient products. And labeling programs, like ENERGY STAR, help consumers figure out which efficiency options are most effective. All of these techniques are proven ways to promote energy efficiency. They work, and are cost effective for society. In fact, energy efficiency is the cheapest, cleanest, fastest source of energy supply!

Do you believe states should extend their Low-Income Energy Programs?

Low income programs: Energy costs are a much larger fraction of total expenses for many families who are less well off, which is why low-Income energy programs are good idea. My own preference would be to substantially increase investment in energy efficiency for these households, which would both save money and create jobs.

Timothy Considine

SER Professor of Economics, Center for Energy Economics & Public Policy at University of Wyoming
Timothy Considine
What are some good tips for saving on energy bills?

1.) Conserve hot water – take short showers

2.) Check your windows – get an energy audit to find out where the problems are

3.) Hang your clothes out to dry!

4.) Turn out the lights and the TV when you leave the room (I tell my kids this all the time with limited success).

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

1.) For people that can afford investments in solar and other renewable options like geothermal, tax deductions are limited by the IRS as income goes up.

2.) Tax credits not so limited are more effective than deductions.

3.) Peak load pricing and marginal cost pricing are the most effective means to cut energy use.

Do you believe states should extend their Low-Income Energy Programs?

1.) If people need income assistance there are other programs, consumers make rational choices when they face the correct price signals.

2.) If low income assistance programs can be structured to provide lump sum payments and maintain incentives to promote efficient use so much the better.

Joseph K. Goodman

Associate Professor of Marketing, Olin Business School, Washington University in St. Louis
Joseph K. Goodman
What are some good tips for saving on energy bills?

The biggest one is simply turning up the thermostat by one or two degrees, and when the temperature drops, open up some windows! You’ll save energy, and get (free) fresh air. The new thing is to have a “smart" or automated thermostat (like the Nest) that turns up the temperature when you leave the house, or one that you can control from your smart phone (hold on a second—I need to check my temperature at home). Most of the cost to cooling our house is during the day—when no one is even home! Mine is programmed to go up to 83 when I’m not at home. I don’t think people realize how much energy air conditioning uses.

Of course, buying a new A/C can also help. A/C units today (some are 21 SEER, which is the rating of efficiency) are 2 to 3 times as efficient as what they were 20 years ago (6-10 SEER), so many people could cut their bill by a third! Plus, A/C units become less efficient as they age, so if you have a really old system, the savings could be even more. The same can be said about refrigerators and freezers. You can get a wattage meter for under $20, hook it up to your old fridge, and see how much energy it is using. A new fridge might pay for itself in a few months! That’s a pretty good ROI.

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

I do think tax deductions can help motivate people to make more energy efficient decisions, but they don’t necessarily motivate people to be more energy efficient. They motivate people to make different decisions. For example, if a state or utility subsidizes the cost of a CFL (as Ameren does in Missouri), people will buy more energy efficient light bulbs because they want to save money (not because they are necessarily motivated to save energy). While these are good short-term programs, I doubt they change overall attitudes about efficiency, as they are unlikely to focus people on the issue of saving energy.

Increasing the cost of energy would help with consumption, but no politician wants to admit it. While there are times that microeconomics does not predict consumer behavior (see “Predictably Irrational” by Dan Ariely and the entire field of Judgment and Decision Making founded by Kahneman and Tversky), in this case, increasing the cost of energy in America might help people think about energy consumption more. The reality is that the US has some of the cheapest energy in the world, which explains why we love our A/C and SUVs. I’m writing this from a place on earth where A/C is weak and gas prices are over $8 a gallon! It hasn’t killed their economy—in fact they’ve had one of the fastest growing economies in the world (3 times that of the US).

Saying that, I think we can be more creative to get people to think about consumption. For example, people hate to pay as they go. If the thermostats in our houses made you swipe a credit card every week, or people could see the dollars spin on their thermostat like they see at the gas pump, the pain of paying would increase, and they would be more efficient. Do you remember paying per minute for dial up Internet access, or at Internet cafes? It’s really painful!

Do you believe states should extend their Low-Income Energy Programs?

Yes. In general, these programs really help those most in need (many of which are senior citizens on fixed incomes), who often have less efficient older homes. These programs are not handouts, but help lower the costs through subsidies and making homes more efficient. Broadening programs that make homes more efficient could help all of us. These assistance programs also allow energy companies to raise prices for the rest of us, without giving grandma heatstroke. Investing in making our homes more efficient is good for the economy too, as are investments in renewable energy—both can reduce long-term costs and create jobs. Take Iowa, for example, the state decided (for several reasons) to invest in wind energy, and many of its more-windy neighbors did not. Iowa is not only one of the top producers of wind energy, but also in the manufacturing and installation of wind turbines.

Laura Lamontagne

Assistant Professor of Economics, Christopher Newport University
Laura Lamontagne
What are some good tips for saving on energy bills?

One guaranteed means of being more energy efficient is simply to reduce consumption. Be conscious of turning of a light when leaving the room or turn down the thermostat in the winter.

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

Tax deductions certainly motivate people to be more energy efficient. However, depending on the initial investment they may not have as large of an effect as intended. For example, I can install solar panels on the roof of my house to produce green energy and reduce my monthly electric bill but I will need to invest thousands of dollars up front. On a smaller scale I can buy a new air condition that is substantially more energy efficient and also lowering my electric bill, but by how much when you consider the several hundred dollars spent on the new unit itself. So between the tax credit and lower electric bill how much will the consumer save compared to the initial investment?

Ultimately it will depend on peoples’ time, preference and discount rates. A dollar today is worth more than a dollar tomorrow. Investment in more energy efficient technologies will take many years to pay itself off. The discounted future value of the savings compared to the initial cost will ultimately determine if the investment is worthwhile.

Victor A. Matheson

Professor of Economics, College of the Holy Cross
Victor A. Matheson
What are some good tips for saving on energy bills?

Simple programmable thermostats are easy to install even by an amateur and can significantly lower your heating and cooling costs by automatically adjusting temperatures during the day when people are away at work or at night when they are sleeping. Fancier 'smart' thermostats like the Nest thermostat now owned by Google uses wi-fi, artificial intelligence, and motion sensors to "learn" the household's home behavior to improve even more on heating and cooling.

LED light bulbs have plummeted in price over the past 5 years. LEDs have all of the energy savings advantages of CFLs (compact fluorescents) with none of the disadvantages (slow start up, disposal issues, dimmability, etc.) You can now get a 60-watt equivalent LED replacement bulb for $5. Even at modest usage, replacing all regular incandescent bulbs with LEDs will return the investment within just a few years, and the LEDs can last for decades before needing replacement.

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

Typically, economists would say that the best way to encourage efficiency is simply to increase the price of energy. Tax gasoline, electricity, or heating oil more heavily and eliminate subsidies for fossil fuels that artificially lower their prices, and you get much more efficient energy usage, especially over longer time periods.

That being said, tax deductions for big projects like installing solar or major insulation improvements can be effective, but for smaller conservation uses like light bulbs or thermostats, point of sale rebates are much better. Who wants to fill out a bunch of tax forms and then wait until April 15 just to save $2 on a light bulb?

For small items or for items where energy efficiency is typically not the primary concern of the consumer, government mandates like 'Energy Star' regulations or the so-called 'light bulb ban' are really good for both the environment and the consumer. Deciding on the right light bulb can be too time consuming for the consumer to make smart choices on their own, so mandating energy efficient bulbs saves consumers a ton of money while eliminating the headaches involved in choosing from a bewildering array of choices. Similarly, for many common items, it might cost a manufacturer $5 more to make a product that saves $50 in energy costs over its llifetime. When a consumer is buying the product at WalMart, however, they may only look at the retail price, so no one makes the short-run more expensive, long-run cheaper product. By mandating energy usage standards, all manufacturers are forced to make the more energy efficient product that wouldn't get made otherwise. Consumers are better off because the government forces them to make the intelligent choice.

Do you believe states should extend their Low-Income Energy Programs?

Yes. Low-income consumers are even less likely to make wise long-run decisions regarding energy efficiency due to cash and credit constraints. And they need the long-run savings even more than the average household.

Kenneth Gillingham

Assistant Professor of Economics, Yale University
Kenneth Gillingham
What are some good tips for saving on energy bills?

To save on electricity bills, buy Energy Star appliances. Sign up for critical peak pricing if your utility offers it. To save on heating and cooling bills, get a ‘smart thermostat’.

Do you believe tax deductions are a good way in motivating people to be more energy efficient? Also what is the best way to encourage more energy efficiency?

Tax deductions may be somewhat helpful, but the greater challenge for energy efficiency is information and the upfront cost of energy efficiency. It is inexpensive to weatherize a home, but many people do not want to deal with the hassle, even if they would save energy. It is expensive to increase energy efficiency in many other ways – even if it can be expected to pay off. Many people face ‘sticker shock’ and are not willing to make the investment. They may not be aware that the investments will pay off or may be more focused on today than tomorrow for a variety of reasons.

Do you believe states should extend their Low-Income Energy Programs?

This is really a question of equity. Low-Income Energy Programs are a targeted way to help low income households with their energy bills. Fundamentally, this is a question of whether we should support low income households to reduce inequality.

Methodology

July, followed by August, tends to be the month with the highest energy consumption, according to the U.S. Energy Information Administration. And as temperatures rise, so do energy costs. To help consumers with the most costly energy bills budget effectively, WalletHub has identified 2014’s Most & Least Energy-Expensive States. We used six key metrics to examine the various factors — from the price and consumption of residential electricity to the price of fuel at the pump and number of miles driven — that affect energy costs in the 50 U.S. states and the District of Columbia.

To calculate the average monthly energy bill in each state, WalletHub used the following equation:

(Average Monthly Consumption of Electricity x Average Retail Price of Electricity) + (Average Monthly Consumption of Natural Gas x Average Natural Gas Residential Prices) + [Average Fuel Price * (Average Monthly Vehicle Miles Traveled / Average Car Consumption / Number of Drivers)] = Average Monthly Energy Bill Consumers Pay in Each State

Source: Data used to create these rankings is courtesy of the U.S. Energy Information Administration, the Federal Highway Administration, the U.S. Environmental Protection Agency (EPA) and the AAA’s Daily Fuel Gauge Report.

Author
User
John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture,…
1241 Wallet Points
Disregard my comment. I just read it wrong.
Oct 8, 2014  •  Reply  •  Flag
I don't see how this can be accurate. I just moved from Redding, CA which has it's own city-owned electric company and PG&E for gas, to Star, ID. Our gas and electric rates are MUCH cheaper in Idaho. We have neighbors from Folsom, CA and theirs are cheaper too.
Oct 8, 2014  •  Reply  •  Flag
John,

I'm curious re: why GA has such high natural gas costs, #36, vs other southern states like TN, #8.

Would you be willing to send me the natural gas data from the EIA that you used for this analysis.

Thanks in advance, Mike
mike.salva@comcast.net
Jul 17, 2014  •  Reply  •  Flag
What you seem to have forgotten in your calculation for avg. fuel consumption is the difference in traffic for different cities and states. I moved from OKC 10 months ago to Denver, so to see OK last in avg. fuel cost is asinine. People may generally drive more miles in OK because of how spread out the city is, but there is also generally no sitting in traffic. Plus the fact that the avg. fuel read more
Jul 17, 2014  •  Reply  •  Flag