How do utility rates vary by state?


Quick Answer

Utility rates can vary significantly by state, depending on factors such as population, available resources and the presence of private energy companies versus public commissions. In general, prices are higher in states with limited geographic access to energy resources, in states with high demand and when there are more private firms.

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Full Answer

The location and geographic layout of a state plays a large factor in determining its utility price, as this influences its ability to access different types of energy. For example, Hawaii typically has exceedingly high energy costs because it is an island and thus relies on importing fuel to generate electricity, which carries a high transportation cost. Similarly, Alaska has numerous geographic aspects that impede the easy delivery of fuel such as coal for the generation of power. The state also has a low population density, meaning it costs more to create power plants and distribute the electricity to different areas, whereas states with a large population have easier access to power.

States that need to import fuel also often carry higher costs, as states with sustainable or renewable energy practices may have lower costs. The emissions regulations of states also affect price, as some states may charge more for energy to offset the cost of reversing ill environmental effects. States with a deregulated utilities sector may also feature higher prices from private companies, which increase prices to protect profits compared to state companies that don't have the same financial requirements.

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