2015’s Most & Least Energy-Expensive States

by Richie Bernardo

WH-Best-Badges-150x150-2Get ready to crank up those air conditioners. July tends to be the hottest month of the year, and the heat will likely burn a hole through your wallet. In fact, about 7.3 percent of the average consumer’s total annual income goes to energy costs. So if you’re planning to relocate this summer, perhaps to start a new job, you may want to consider the disparity in energy costs among the candidate states on your short list.

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 areas such as Southern Louisiana, with scorching summer weather but cheap electricity, households still 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 budget for certain utilities, WalletHub compared the total monthly energy bills in each of the 50 states and the District of Columbia. We constructed the ranking using eight key metrics that examine the consumption rates and prices of four energy types: electricity, natural gas, motor fuel and home heating oil. Our findings, as well as expert commentary and a detailed methodology, can be found below.

Main Findings

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Overall Rank

State

Total Energy Cost

Monthly Electricity Cost
(Rank)

Monthly Natural Gas Cost
(Rank)

Monthly Motor Fuel Cost
(Rank)

Monthly Home Heating Oil Cost
(Rank)

1 District of Columbia $223 $79
(1)
$51
(41)
$84
(1)
$8.76
(37)
2 Colorado $244 $93
(5)
$44
(38)
$107
(6)
$0.10
(13)
3 Washington $245 $99
(8)
$30
(21)
$113
(13)
$2.95
(27)
4 Oregon $261 $105
(11)
$28
(17)
$126
(23)
$3.00
(29)
5 Arizona $268 $136
(36)
$19
(9)
$113
(11)
$0.01
(4)
6 New Mexico $274 $87
(3)
$35
(27)
$151
(44)
$0.03
(7)
7 Illinois $274 $87
(2)
$65
(50)
$122
(17)
$0.25
(16)
8 Florida $276 $148
(47)
$3
(1)
$124
(21)
$0.02
(6)
9 California $280 $96
(6)
$32
(22)
$153
(45)
$0.10
(12)
10 Louisiana $284 $141
(41)
$20
(11)
$123
(19)
$0.02
(5)
11 Iowa $287 $110
(17)
$44
(37)
$131
(30)
$1.40
(24)
12 Montana $287 $105
(10)
$35
(26)
$144
(39)
$2.98
(28)
13 Arkansas $287 $129
(30)
$27
(16)
$131
(31)
$0.05
(9)
14 Wisconsin $289 $109
(16)
$45
(39)
$129
(29)
$4.84
(34)
15 Tennessee $289 $137
(37)
$23
(12)
$129
(28)
$0.24
(15)
16 South Carolina $290 $162
(50)
$17
(5)
$111
(9)
$0.62
(21)
17 Idaho $291 $115
(20)
$32
(23)
$141
(38)
$3.41
(31)
18 Kentucky $294 $129
(31)
$26
(15)
$138
(36)
$0.86
(22)
19 North Carolina $294 $138
(38)
$18
(8)
$134
(33)
$3.12
(30)
20 Virginia $296 $136
(35)
$28
(18)
$122
(16)
$10.51
(39)
21 South Dakota $296 $126
(28)
$29
(19)
$136
(34)
$4.34
(33)
22 Ohio $298 $115
(19)
$52
(42)
$128
(26)
$4.02
(32)
23 Kansas $298 $119
(23)
$52
(43)
$128
(24)
$0.04
(8)
24 Nevada $301 $121
(25)
$33
(24)
$147
(41)
$0.37
(20)
25 Texas $302 $148
(46)
$20
(10)
$134
(32)
$0.001
(1)
26 Nebraska $304 $140
(39)
$40
(31)
$125
(22)
$0.36
(19)
27 Michigan $304 $108
(15)
$66
(51)
$128
(25)
$2.06
(25)
28 Hawaii $307 $179
(51)
$5
(3)
$122
(18)
$0.002
(3)
29 Minnesota $307 $107
(12)
$45
(40)
$149
(42)
$6.34
(36)
30 New Jersey $307 $118
(21)
$65
(49)
$105
(3)
$20.52
(42)
31 Utah $308 $91
(4)
$56
(45)
$161
(48)
$0.31
(18)
32 West Virginia $310 $124
(27)
$30
(20)
$151
(43)
$5.12
(35)
33 Delaware $312 $146
(45)
$34
(25)
$113
(12)
$17.95
(40)
34 Missouri $318 $140
(40)
$41
(33)
$136
(35)
$0.29
(17)
35 Pennsylvania $319 $133
(34)
$44
(36)
$105
(4)
$37.70
(43)
36 Maryland $321 $141
(42)
$38
(29)
$124
(20)
$18.51
(41)
37 New York $321 $110
(18)
$60
(47)
$112
(10)
$38.65
(44)
38 Indiana $322 $123
(26)
$41
(32)
$157
(46)
$1.20
(23)
39 Alabama $323 $160
(49)
$25
(13)
$138
(37)
$0.11
(14)
40 New Hampshire $324 $120
(24)
$16
(4)
$109
(8)
$79.64
(47)
41 Mississippi $331 $153
(48)
$17
(6)
$161
(47)
$0.002
(2)
42 Georgia $331 $145
(44)
$42
(34)
$144
(40)
$0.09
(11)
43 Oklahoma $334 $130
(32)
$37
(28)
$167
(49)
$0.07
(10)
44 Maine $341 $101
(9)
$4
(2)
$128
(27)
$107.60
(50)
45 Vermont $342 $118
(22)
$18
(7)
$119
(15)
$86.62
(48)
46 North Dakota $342 $131
(33)
$26
(14)
$176
(50)
$9.00
(38)
47 Rhode Island $346 $98
(7)
$54
(44)
$95
(2)
$99.18
(49)
48 Alaska $349 $127
(29)
$56
(46)
$105
(5)
$61.22
(45)
49 Massachusetts $352 $108
(14)
$63
(48)
$108
(7)
$73.48
(46)
50 Wyoming $355 $108
(13)
$42
(35)
$203
(51)
$2.14
(26)
51 Connecticut $410 $142
(43)
$39
(30)
$118
(14)
$110.55
(51)

Most-&-Least-Energy-Expensive-States-Artwork

Ask the Experts

According to the U.S. Energy Information Administration, the highest energy consumption of the year is recorded in July, followed by August. And energy costs are bound to rise in tandem with climbing temperatures. For insight into the various ways Americans can reduce their dependence on traditional energy sources — and thereby diminish their costs as well — we asked a panel of energy and policy experts to weigh in. Click on the experts’ profiles to read their bios and responses to the following key questions:

  1. What are some good tips for saving money on energy bills?
  2. Are tax deductions and credits effective at incentivizing households to be more energy-efficient?
  3. Do you believe the government should continue to provide energy assistance to low-income households? If so, what is the best way to do so?
  4. What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?
< >
  • Sanya Carley Associate Professor in the School of Public and Environmental Affairs at Indiana University
  • Steven C. Hackett Chair and Professor in the Department of Economics at Humboldt State University
  • David C. Popp Professor of Public Administration and International Affairs at Syracuse University, Maxwell School of Citizenship and Public Affairs
  • Barry Solomon Professor of Geography and Environmental Policy in the Department of Social Sciences at Michigan Technological University
  • Sarah Jacobson Assistant Professor of Economics at Williams College
  • Mark Jacobsen Associate Professor in the Department of Economics at University of California, San Diego

Sanya Carley

Associate Professor in the School of Public and Environmental Affairs at Indiana University
Sanya Carley
What are some good tips for saving money on energy bills?

There are many things that one can do to save money on energy bills, although some are harder than others. Beginning with the easier tasks, one can change settings on their household appliances. Instead of turning the refrigerator or freezer to the coldest setting, consider turning it to a medium setting (note the dual benefit: ice cream is tastier this way). Adjust your thermostat by a few degrees so that your house requires less heat in the winter and less air conditioning in the summer. Consider adding an extra blanket to your bed in the winter and dropping the thermostat by a few more degrees during the night. One can also turn the temperature down on their hot water heater or run loads of wash on the cold setting instead of the hot setting. Set computers so that they go into sleep mode after several minutes of sitting idle, and turn them off when they are not in use for any longer extent of time, such as overnight.

While still fairly easy, there are a number of tasks that require a little more work and, sometimes, upfront cost. Instead of drying your clothes in the dryer, you could hang them outside in the sun to dry. You could also swap out your old incandescent bulbs for compact florescent light bulbs, install ceiling fans and run them instead of air conditioning units, turn off the light behind you when you leave a room, and wait until your dishwasher is entirely full before running it. When appliances and other electrical items are not in use but remain plugged into the wall, they are still consuming electricity; this is often referred to as a "phantom load." Electronics such as laptops and cell phones tend to be particularly bad about drawing electricity even when turned off. Consider unplugging these gadgets and other items when they are not in use.

The last set of possibilities requires more work and larger upfront costs. Within this category, I place all tasks related to improving the efficiency of household appliances and building materials. One could swap out their older, less efficient washing machine, for example, for an Energy Star rated front-loader washing machine. Many appliances these days offer an energy efficient option, although they generally — but not always — come with a cost premium. One could also weatherize their home by caulking cracks, sealing in windows and doors, and installing extra installation.

Finally, consider calling your utility company and asking if they offer any services to help you identify ways to be more efficient in your home. Many utilities offer such services for free, and will send someone to your house to prepare a formal or informal audit for you.

Are tax deductions and credits effective at incentivizing households to be more energy efficient?

Millions of people around the country have taken advantage of tax deductions and credits offered by both the state and federal government. These tax incentives generally apply to the purchase of more efficient technologies, such as efficient appliances, solar thermal panels, wood or pellet stoves, or efficient light bulbs. In the sense that we know that these tax incentives have been applied widely, one could argue that they have been effective at enhancing energy efficiency. What we do not know with great accuracy, however, is the percentage of those that accept these tax incentives but would have purchased the more efficient technologies anyway.

Do you believe the government should continue to provide energy assistance to low-income household? If so, what’s the best way?

I do believe that the government should continue to support low-income households through energy efficiency services. Lower income populations tend to spend a larger percentage of their income on energy than higher income populations. Providing these types of services, such as those offered through the Weatherization Assistance Program, provide other benefits beyond just energy savings, including health benefits due to decreased exposure to air and water pollution from electricity generation, environmental benefits, and secondary benefits associated with using one's saved income for other basic needs.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

This question moves us from the realm of electricity to that of transportation. The recent decline in the price of oil affects consumers’ interest in fuel economy. When consumers pay handsomely at the pump, they may be more inclined to consider replacing their vehicle with a more fuel efficient option. When gas is cheap, one may be less concerned with how many miles-per-gallon his or her vehicle gets. The real issue here, however, is consumers' predictions about future gas prices, and the degree to which they factor these perceived costs into estimates of their total cost of vehicle ownership. In general, evidence shows that consumers tend to under-value fuel economy and an expectation that gas prices will remain low will likely perpetuate this under-valuation.

Steven C. Hackett

Chair and Professor in the Department of Economics at Humboldt State University
Steven C. Hackett
What are some good tips for saving money on energy bills?

I suggest that people switch out most all of their incandescent lights with compact fluorescent or LED lighting. If you have the space, use a clothes line rather than a dryer on sunny days. Turn off lights when leaving a room. If you live in an area with hot summer days but that cools down in the evening, then consider installing a whole-house fan and turn off air conditioning in the evening. Look into whether there are incentive programs for leasing or installing rooftop solar PV or solar water heating systems if you own a home with good sun exposure.

Are tax deductions and credits effective at incentivizing households to be more energy efficient?

Tax deductions and credits have an important role to play. But people have to be informed of the potential cost-effectiveness of various energy efficiency measures, and that means both consumer education and access to low-cost or free energy audits. While tenants in rental housing usually pay their own energy bills, and have incentive to reduce those bills, there may be a split incentive with the property owner in terms of installing energy-efficient measures. Tax deductions and credits may not be effective when incentives are split between tenants and landlords. And finally, there are many low-income households that do not incur an income tax liability, and so may not be able to harvest tax deductions or credits. Other targeted programs are needed in these cases.

Do you believe the government should continue to provide energy assistance to low-income household? If so, what’s the best way?

Energy assistance programs are an important way to support people living below the poverty line. When we subsidize energy consumption, however, we reduce a household's incentive to limit energy consumption. Retaining full-price energy but providing periodic targeted rebates to income-qualified households may work.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

Yes, low oil prices affect investments in energy efficiency and in renewables. Let's look at an example from the past: Between January 2007 and July 2008 the average price of a gallon of gasoline in the U.S. rose by nearly 80 percent. American consumers responded by reducing gasoline consumption (by an estimated 7 percent in August 2008), increasing public transit ridership (by 5.2 percent in the second quarter of 2008), and buying a record number of hybrid cars. Higher petroleum diesel prices drove up the price of biodiesel, which in turn contributed to the price of soybean oil doubling between January 2007 and April 2008, and a spike in farmland prices. By November 2008, however, U.S. gasoline prices had fallen by 58 percent (relative to July), and hybrid car sales dropped by 50 percent. Clearly consumers respond to price signals, and also to volatility. As renewables become cheaper, however, that sensitivity should decline.

David C. Popp

Professor of Public Administration and International Affairs at Syracuse University, Maxwell School of Citizenship and Public Affairs
David C. Popp
What are some good tips for saving money on energy bills?

Consumers should pay more attention to the potential energy savings of goods, both on simple things like light bulbs and also on major appliance purchases. While appliances with better energy efficiency cost more up front, with lower energy bills consumers can recover those costs in just a couple of years.

Are tax deductions and credits effective at incentivizing households to be more energy efficient?

Potentially, but the more targeted they are the better. If high upfront costs discourage households from investing in energy efficiency, tax credits and deductions can help. But the danger is that much of the value of the credit will go to households that would have made energy efficient investments anyway. Phasing out credits at higher income levels would help prevent that from occurring.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

Perhaps a bit (e.g., sales on larger cars are increasing), but previous investments in energy efficiency don't just go away. In past cases when low prices followed a spike in energy prices, energy efficiency did not return to pre-price spike levels.

Cheap oil should have little impact on the transition to renewables. Renewables are primarily the focus of the electricity sector, where oil is not often used. Cheap oil may lead to low natural gas prices as well, but that could help renewables. Natural gas and renewables are often used in tandem. Since renewable energy from the wind and sun is sporadic, other sources of power that can be turned on and off quickly are used to complement renewable production. Natural gas power plants work well for this.

Barry Solomon

Professor of Geography and Environmental Policy in the Department of Social Sciences at Michigan Technological University
Barry Solomon
What are some good tips for saving money on energy bills?
  • Turn lights off when not in use; Install motion detector lights;
  • Buy Energy Star appliances, and consider upgrading to more efficient ones before the end of their useful lives;
  • Run dishwashers and washing machines at full capacity;
  • Replace single pane windows with low-e, double pane windows;
  • Plant deciduous shade trees in front of south facing windows;
  • Use ceiling fans instead of A/C for cooling;
  • Don't heat rooms that are not in use;
  • Shut curtains or blinds on windows at night during cold winter days.
Are tax deductions and credits effective at incentivizing households to be more energy efficient?

Yes, to a point. They incentivize people to buy energy efficient technologies, which may or may not affect how the technologies are used.

Do you believe the government should continue to provide energy assistance to low-income household? If so, what’s the best way?

Yes. Since low income people pay less, if any taxes, and often rent instead of own their own homes, the best way would be direct assistance for utility bills, if low-income rates are not available.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

Oil prices are the single greatest determinant of energy policy, public interest in energy issues, as well as alternative sources of energy. Thus, when the price of oil price declines, it often discourages the greater use of energy efficient technology as well as renewable sources of energy. Fortunately, the price of wind power has also been dropping, and the price of solar photovoltaic cells has been dropping even faster, and a long-term drop in oil prices is not sustainable.

Sarah Jacobson

Assistant Professor of Economics at Williams College
Sarah Jacobson
What are some good tips for saving money on energy bills?

Heating and air conditioning are major household uses of energy, so if you can find ways to minimize those -- with smart thermostat settings, clever deployment of window shades and blinds, more tolerance for cold in the winter and hot in the summer, etc. -- that will help. For electricity, there are interesting solar financing deals right now whereby you can let a company put solar panels on your house, and this lets you avoid the up-front investment cost associated with solar but can dramatically cut electricity bills. It doesn't hurt to be careful on smaller energy uses, too: get in the habit of turning off lights you don't need; switch to LED lights; don't leave unused device chargers plugged into the wall; and use less hot water (e.g., in showers and clothes-washing).

Are tax deductions and credits effective at incentivizing households to be more energy efficient?

It doesn't seem like on their own they have big effects. Some such programs do increase take up of energy efficient devices, but only by a small amount. Some "social" incentives also seem to have small effects: for example, text on an electricity bill that compares this household's use to that of neighbors does change behavior for the better. But I don't think this is a behavioral problem we've figured out how to fully solve.

Do you believe the government should continue to provide energy assistance to low-income household? If so, what’s the best way?

This is a hard one, because for environmental reasons we should reduce subsidies on energy in general, but to get rid of energy assistance to low-income households would make some people's lives much harder. A classic way to address this kind of issue would be to get rid of the energy assistance and instead provide cash assistance that is on average the same size as the energy subsidies would have been; then the households can use that money for whatever mix of energy and other goods they would like to buy. In theory, this would leave many households better-off than the energy assistance program leaves them -- and of course it should cost no more to the government than the energy assistance program. Practically, such a program would be difficult to implement, in part because some households (those that tend to use a lot of energy) would be made worse off.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

I have read that the recent oil price drop reduced demand for fuel-efficient hybrids, and so by extension one would expect similar effects for other energy-efficient technology. I'm a bit surprised that this has been observed because most people believe that oil prices will eventually start rising again -- the factors keeping prices low are mostly transitory, and there are fundamental forces that continue to push oil demand up. Fundamentally, increases in energy efficiency and a transition to renewables should proceed apace, eventually. For the short term, perhaps we are in a state where energy efficiency will stagnate for a bit, but that seems less likely for the transition to renewables since that transition is made based on projections over long time horizons.

Mark Jacobsen

Associate Professor in the Department of Economics at University of California, San Diego
Mark Jacobsen
What are some good tips for saving money on energy bills?

Sometimes, making small changes to heavy uses of energy (for example, small adjustments to the time of day heating or air conditioning comes on, or changing the temperature by a few degrees during certain parts of the day) can be equally or more important than very dramatic changes to something that is only a small part of your energy bill. Of course, saving energy across all uses is best! I think the kill-a-watt meters (sometimes available subsidized or free-to-borrow from your local utility) can also give a really nice view into what items in your home are the biggest consumers of electricity.

An interesting recent reference on this point is Pritoni et al. (Energy efficiency and the misuse of programmable thermostats: The effectiveness of crowdsourcing for understanding household behavior, 2015), who find that many thermostat technologies are not being used as efficiently as hoped.

Are tax deductions and credits effective at incentivizing households to be more energy efficient?

They certainly have some visible effects, though I think they are much more effective for certain groups (like homeowners working on a renovation) than they are for others (like renters and many businesses). I think better policy would provide equal incentives across the board, for all users of energy. For example, raising the price of polluting or fossil-based energy through taxes would give an incentive for anyone who is paying for energy to find a way to conserve. As long as another tax (for example the sales or income tax) is reduced at the same time, very strong conservation incentives can be created without increasing the total dollar amount that the government gets in revenue. If the energy taxes fall more on certain income groups than others, then it would make sense for the tax reductions to be targeted so that overall income inequality is either unaffected or improved.

Do you believe the government should continue to provide energy assistance to low-income household? If so, what’s the best way?

I think there are much better ways to provide assistance to low-income households than the offer of discounted energy. One difficulty with using subsidized energy prices to help low-income households is that the targeting often fails: we often try to subsidize rates for people who use relatively little energy (the idea being that these are likely to be lower-income households). However, it turns out that many high-income households use relatively little energy (and so are being subsidized by everyone else!) while there are many low-income households that use relatively high amounts of energy and so still pay high energy prices. I think Borenstein (The Redistributional Impact of Nonlinear Electricity Pricing, 2012) is an excellent reference on this: he finds that this strategy of "increasing-block" electricity pricing accomplishes relatively little redistribution to low-income households and comes at very high cost. A second reason I think it is better to assist low-income households in a different way is that low energy prices might have the unintended effect of discouraging conservation. If it is possible to provide other forms of assistance we might be able to help low-income groups while still providing strong incentives to conserve energy.

What is the impact of the recent oil price drop on energy efficiency? Is cheap oil inhibiting the transition to renewables?

The University of Michigan Transportation Institute provides very nice data on car choices and is updated every month. The June 2015 numbers are in and while it may be too soon for a definitive answer, the trend looks pretty flat! We are in a period where fuel economy standards are tightening very quickly, and so we should expect to see rising fuel economy. Instead, with low oil prices, it appears that consumers are choosing larger, thirstier vehicles and so could be holding the trend flat in spite of the tightening standards. I think we'll have a much clearer picture in the next few months as the 2015 model year concludes.

An excellent source on this point is Busse et al (Are Consumers Myopic? Evidence from New and Used Car Purchases, 2013). That paper finds that vehicle consumers respond surprisingly sharply to oil prices: the market share of eco-friendly vehicles drops rapidly in periods of low gasoline price (which of course is closely tied to oil price), while the share of the largest, lowest-MPG vehicles sees a correspondingly large increase. From Busse et al (2013): "A $1 increase in the gasoline price leads to a 21.1 percent increase in the market share of the highest fuel economy quartile of cars and a 27.1 percent decrease in the market share of the lowest fuel economy quartile of cars."

Methodology

To help consumers budget for costly energy bills, WalletHub compared the 50 states and the District of Columbia across eight key metrics, ranging from the price and consumption of residential electricity to the price and consumption of motor fuel.

The following equation was used to calculate the average monthly energy bill in each state:

(Average Monthly Consumption of Electricity * Average Retail Price of Electricity) + (Average Monthly Consumption of Natural Gas * Average Natural Gas Residential Prices) + (Average Monthly Consumption of Home Heating Oil * Average Home Heating Oil Residential Prices) + (Average Fuel Price * (Miles Traveled/Average Motor-Fuel Consumption/Number of Drivers in the State)) = Average Monthly Energy Bill

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

Author

User
Richie Bernardo is a personal finance writer at WalletHub. He graduated with a Bachelor of Journalism and a minor in business from the University of Missouri-Columbia. Previously, he was a…
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Discussion

 
By: Susank1
Jul 20, 2015
I agree with Jackb - your experts completely missed the boat, especially on electricity prices. I live in Oakland, CA. In California, ever since Enron's fake energy crisis, residential consumers have had to pay for electricity with a tiered rate structure based on usage. The idea was to get people to conserve by using a punitive pricing structure in the tiers, and the retail residential price lost its mooring to the cost of production. There read more
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By: Jackb
Jul 14, 2015
I think your experts missed the boat BIG TIME, particularly on electricity.

I lived in San Jose, CA and paid PG&E $0.36/kWh. Then I got Solar from SolarCity (leased) paying $0.19/kWh. I moved to Wichita Falls TX and am paying $0.11/kWh. Even though the temp in TX is hotter, 95 going to 100 degrees this week vs San Jose, CA 75 going to 88, my electric bill is lower, e.g. less $ than CA.
Gasoline - similarly read more
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