Residents in Blue States Pay Much More for Electricity Than in Red States: Study

A new report finds that blue state residents pay far more for electricity than their red state counterparts due to aggressive climate policies.

Electric power lines at sunset in El Segundo, California, on Aug. 31, 2022. Patrick T. Fallon/AFP via Getty Images

Blue state residents, whose governments have adopted aggressive climate policies, are paying much more for electricity and fuel than their counterparts who live in red states that lack such policies, according to a new report from America’s largest membership organization of state legislators.

The report from the American Legislative Exchange Council (ALEC), provides a breakdown of energy prices throughout the United States while demonstrating the relationship between big government policies and high energy costs.

“While some states rely on free market principles and innovation to limit manmade emissions into the atmosphere, others use a more heavy-handed approach by implementing of standards, enacting mandates and pricing schemes that benefit specific types of technologies,” the report reads.

“Whether it is mandates, subsidies, or some combination of both, when the government inserts itself into the energy markets, taxpayers wind up footing the bill.”

The trend of government mandates being linked to higher electricity prices is evident throughout the report.

For instance, simply being part of the Renewable Portfolio Standard (RPS), which dictates that a certain amount of a state’s electricity generation must come from renewable sources, pushed up electricity costs in a participating state by around 11 percent.

Big Government Means Higher Electricity Costs

Overall, the report finds that red states that lack their own green energy mandates or that don’t take part in cap-and-trade schemes (systems that limit aggregate emissions from a group of emitters by setting a cap on maximum emissions) have the lowest electricity costs.

Red states Idaho, Wyoming, and Utah had the lowest electricity prices. None of them have a government-mandated RPS or participate in cap-and-trade schemes, such as the Regional Greenhouse Gas Initiative (RGGI), which is a CO2 cap-and-trade program among 10 states in the mid-Atlantic and Northeast regions of the country.

Utah has a voluntary renewable energy goal of 20 percent by 2025, but it’s not a mandate. Idaho and Wyoming don’t have state-mandated net metering, which is the utility billing practice of recording the excess energy generated by a solar installation and applying it to a customer’s bill as credit toward grid-drawn energy.

While the report notes that the impact of state-mandated net metering is “still not clear cut,” some utility companies have said that it represents a cost shift from people who can afford to install solar panels, leaving people without solar to pay a greater share of the fixed costs of maintaining the electrical grid.

Outside of red Alaska and blue Hawaii (which are geographic outliers and so understandably have the highest electricity costs), the five states with the highest electricity prices are all blue: California, Massachusetts, Rhode Island, Connecticut, and New Hampshire.

All five states have cap-and-trade schemes and government-mandated RPSs in place. Each of these states has also imposed a state-mandated net metering policy on its utilities.

Overall, the difference in electricity costs between the cheapest red states and the most expensive blue states is substantial. The costs of a kilowatt hour in California, Massachusetts, Rhode Island, and Connecticut are more than double what they are in red states Idaho, Wyoming, and Utah.

“There is a strong correlation between big government policies and higher electricity costs,” the report states.

“When crafting energy and environmental policies, lawmakers should avoid imposing more government controls and instead allow markets to adapt, innovate, and improve.”

Besides electricity, the ALEC study also looked at gasoline costs across states and similarly found that, in general, there was a correlation between government mandates and prices.

“States with more stringent fuel content requirements, more regulations, and above-average taxes generally have higher gas prices than those that do not,” the report reads.

Electricity Versus Natural Gas

Meanwhile, a recent report from the U.S. Energy Information Administration (EIA) found that the cost of heating a home this coming winter using natural gas is going to be roughly 40 percent lower than using electricity.

Households using electricity to heat homes are projected to pay $1,063 on average between November and March, according to a Nov. 7 winter fuels outlook report by EIA. By contrast, households using natural gas are only expected to fork over $601.

The stark findings come as the Biden administration ramps up its war on gas appliances, including furnaces, while touting electrically-powered alternatives (such as heat pumps), all in the name of fighting climate change.

Recently, the Department of Energy (DOE) announced that President Joe Biden will use emergency wartime powers to boost U.S. production of electric heat pumps as his administration continues its push to replace furnaces that run on fossil fuels.

Earlier, the DOE proposed new energy efficiency standards for residential water heaters that would require electric water heaters of the most common size to use heat pump technology and gas-fired instantaneous water heaters to use condensing technology to achieve energy efficiency.

At the time, Republicans on the House Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs argued that the DOE’s proposed appliance efficiency standards would be burdensome and costly for Americans, hitting lower-income families the hardest.