What is the Cost of Electricity?

Four Reasons Why Commercial Electricity Costs Is So Much

What is the Cost of Electricity? How much does it cost you to power your home or office? The cost of electrical energy is measured in kilowatt-hours (kWh) per unit of electrical consumption. The cost of using electricity varies with the amount of energy consumed as well as the quality of the energy.


Based on an analysis of historical data

the following chart shows the average electricity bill per month in each state from January through June of the year. In the left column, you see the average rate per month throughout the year. In the right column, you see the rate per unit of consumption, including both residential and commercial/utility consumption. The final column displays the final deregulated state average electricity price per unit of energy consumption, including both residential and commercial/utility consumption. The deregulated state average electricity price refers to the difference between the regulated rate and the deregulated rate, which can vary from one area to the next. In most states, residential rates are more expensive than those for utility services for the following reasons:


* Hawaii is a very high-cost destination.

Commercial electricity rates are among the highest in the nation. As a result, commercial electricity rates are higher than residential rates. Hawaii’s geography is also conducive to high electricity rates due to the prevalence of electrical power lines overseas. It is cheaper to locate electrical power points on islands because they are closer to land, making transmission and distribution costs lower.


* Among the states with the highest average electric bill

Alaska has the most expensive electricity rate in the United States. Alaska is not located on any large body of water, but rather it is located upon the land, in an arctic climate. Because of its location, Alaska receives vast amounts of solar radiation. This high amount of sunlight can cause Alaskan electricity rates to be much higher than typical rates. In addition, a lack of available space prevents large electric power plants from being built in Alaska.


* four states are among the top 10 most expensive states for commercial electricity rates

These states include Arizona, California, Florida, and Georgia. The cost of residential rates in these four states is typically much higher than the cost of commercial rates in those same states. As a result, businesses and residents living in these areas pay much higher commercial electricity rates than residents of other states.


* Industrial electricity use in the United States

is also a cause for higher energy usage. Industrial sectors in the United States that are dependent on fossil fuels, such as oil and natural gas, have much higher energy usage rates than other sectors. In particular, the electricity consumption by businesses in the transportation sector in the United States is much higher than the consumption among businesses in the service sector. As a result of this, high energy costs are passed onto consumers.

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