Why Electricity Prices Differ So Much by State

The main reasons prices differ by state

Fuel: what the power plants burn

Fuel is a big driver. EIA explains that fuel prices, "especially for natural gas and petroleum fuels (mainly in Hawaii and villages in Alaska), may increase during periods of high electricity demand." When fuel costs rise, the cost to make electricity rises too.

Hawaii is the clearest example. EIA says prices there are high "mainly because most of its electricity is generated with petroleum fuels that must be imported into the state." That helps explain why Hawaii tops the table at 48¢, up from 39.36¢ a year earlier. Alaska, at 28.83¢, also has villages that rely on petroleum fuels, according to EIA.

Local resources: water and wind

Some places have cheap natural resources for making power. EIA notes that "Rain and snow provide water for low-cost hydropower generation, and wind can provide low-cost electricity generation when wind speeds are favorable." The flip side, EIA says, is that droughts or calm winds can push prices up because other sources must fill the gap.

The grid and delivery costs

Every state has to pay for poles, wires and substations. EIA lists repairing damage from accidents or extreme weather and improving cybersecurity among those costs. Where it costs more to build and keep up the grid, those costs show up on home bills.

Delivery is also why homes pay more than factories. EIA says "Retail electricity prices are usually highest for residential and commercial consumers because it costs more to distribute electricity to them." You can see this in every region below: the residential price is higher than the industrial price.

Weather and demand

EIA says "Extreme temperatures can increase demand for heating and cooling," and higher demand can raise fuel and electricity prices. Prices are usually highest in summer, when more expensive power plants are added to meet demand. July is a summer month, so July prices can be higher than a full-year average.

How the state regulates prices

States set their own rules. EIA explains: "In some states, public service (utility) commissions fully regulate prices, and other states have a combination of unregulated prices (for generators) and regulated prices (for transmission and distribution)." These choices shape how prices are set.

Prices by region

States near each other often have similar prices. EIA groups states into census divisions. Here are July 2026 averages in cents per kWh.

Region	Residential	A year earlier	Commercial	Industrial
Pacific Noncontiguous (Alaska, Hawaii)	40.76¢	34.77¢	34.32¢	35.55¢
New England	28¢	27.89¢	22.6¢	17.97¢
Pacific Contiguous	27.14¢	25.99¢	23.94¢	18.01¢
Middle Atlantic	25.71¢	23.53¢	20.14¢	11.41¢
East North Central	19.57¢	17.8¢	14.65¢	10.49¢
South Atlantic	16.12¢	15.28¢	12.26¢	9.25¢
West North Central	15.89¢	15.26¢	11.96¢	9.65¢
West South Central	15.21¢	14.71¢	9.1¢	7.07¢
Mountain	14.92¢	14.59¢	12.14¢	8.38¢
East South Central	14.61¢	13.99¢	13.49¢	7.74¢

The pattern is clear. Alaska and Hawaii, New England, the West Coast and the Middle Atlantic pay the most. The South and the Mountain West pay the least.

One exception stands out. In Alaska and Hawaii combined, the industrial price (35.55¢) was higher than the commercial price (34.32¢) in July 2026. In every other region, businesses paid more than industry. Homes still paid the most everywhere.

Prices also change over time

A state's place in the ranking can shift from year to year. Some states saw big jumps between July 2025 and July 2026. Hawaii rose 22%. New Hampshire rose 16.7%, to 26.6¢. Maine rose 15.8%. Others went down: Connecticut fell 12.5%, to 24.16¢, and Louisiana fell 3%.

For a fuller look at the latest month, see our July 2026 electricity price guide.

What this means if you are thinking about solar

When you pay more for each kWh, every kWh you avoid buying is worth more. That is one reason rooftop solar tends to pay back faster in high-price states. But the price is only part of the story. Sunshine, the cost of the system, and your utility's rules for solar credits also matter. Net metering, where your utility credits the power you send back to the grid, varies by state and utility. The DSIRE database lists current programs.

Also note that the 30% federal Residential Clean Energy Credit is not available for property placed in service after December 31, 2025. Our guide to solar without the tax credit covers what that means.

To test your own numbers, try the solar calculator. It uses your state's EIA price and a PVWatts production estimate. Our example home assumes a 7 kW system, 10,500 kWh per year of use, an installed cost of $3,000 per kW ($21,000 total) and no incentives. See our methodology for the full list of assumptions. Your real results depend on your quote and your utility.

Bottom line

Electricity prices differ by state because the costs behind them differ: fuel, power plants, the grid, weather and state rules. Hawaii pays the most, largely because it burns imported petroleum fuels. Louisiana, Nevada and Utah were among the cheapest in July 2026. To see what you pay, check your state on our electricity prices page, then look at your own bill. Your utility's rate is the number that matters most for you.