Electricity Costs Driven by State Policies, New Report Says

A report by the Institute for Energy Research (IER) reveals that state policies play a significant role in driving electricity costs. It suggests that states governed by Democrats tend to have higher prices due to strict mandates and limits on reliable power sources.

The analysis, shared with the Daily Caller News Foundation, indicates that blue states generally experience higher electricity costs compared to red states. The report, titled “Blue States, High Prices. Electricity Prices: Election Results,” highlights that nine out of the ten states with the highest energy prices, based on the cost per kilowatt-hour, are led by Democrats.

On the flip side, IER claims that 80% of the states with the lowest electricity costs are firmly red. Specifically, 20 of the 25 states with the most affordable rates fall in the red category, while only four belong to the blue group, and just one is considered purple.

IER Director Tom Pyle commented, stating this is fundamentally a blue state issue. He believes blaming former President Donald Trump for escalating electricity prices overlooks the real problems. Pyle emphasized the need for policies that maintain coal-fired power plants and promote diverse energy sources like nuclear and natural gas. He suggested that the administration is striving to assist those states rather than complicate their situations.

The report also employed data from the Energy Information Administration (EIA) and insights from the Lawrence Berkeley National Laboratory to show how state policies impact electricity costs. It notes that many Democratic-led states are implementing rigid mandates aimed at phasing out coal, which affects power generation and pricing.

“Electricity prices are closely tied to state energy regulations, as states can decide which resources enter the grid,” the report states. Additionally, about 86% of states with above-average electricity prices voted Democrat in recent presidential elections.

Furthermore, the report cites findings from the Lawrence Berkeley National Laboratory, revealing that all five states with the highest electricity prices require 100% of their power to come from renewable or carbon-free sources, which the report argues unnecessarily raises costs.

Affordability is noted as a growing concern for Democrats, especially in recent gubernatorial elections in states like New Jersey and Virginia. IER warns in its report that Democratic-led states face significant challenges in energy affordability.

“Electricity prices differ drastically based on which party controls state government. The higher costs are a choice made by policymakers prioritizing climate initiatives over the financial well-being of families,” the report explains.

Some exceptions exist, such as Alaska and New Mexico, which showcase that multiple factors influence electricity rates. Alaska’s geography often results in high transmission costs, while New Mexico benefits from its abundant natural gas resources, which helps keep prices low.

State-Specific Examples

IER presents findings from various states to illustrate how policy decisions affect energy markets and affordability.

New York

The report mentions that New York has electricity prices 58% above the national average. Stringent green energy policies, including the New York State Climate Leadership and Community Protection Act, aim for 70% renewable energy by 2030 and 100% by 2040. Additionally, New York is part of the Regional Greenhouse Gas Initiative, recently criticized by Democratic Pennsylvania Governor Josh Shapiro.

New York also closed the Indian Point nuclear power plant in 2021, which had supplied considerable power to New York City. Although this move received some support, current discussions about expanding nuclear energy are ongoing, focusing on reliability and costs.

California

California’s policies have been criticized for sidelining reliable energy sources, leading to some of the highest electricity costs in the nation—second only to Hawaii. The report attributes the expensive rates to multiple green energy mandates prioritizing emissions reductions over affordability.

They highlight that while California faces wildfires and other challenges, states like Florida manage to keep their energy costs relatively low despite similar demands, pointing to a difference in governance and policy focus.

Florida and Louisiana

The report argues that red states like Florida and Louisiana are managing without steep electricity costs. It states that residents in states prioritizing affordability, like Florida and Louisiana, should serve as a model for others. Even with high air conditioning demands and hurricanes, Florida’s rates remain below the national average, while Louisiana, with abundant natural gas, has the third-lowest rates in the country.

Kentucky

According to IER, Kentucky’s electricity rates are 21% lower than the national average, mainly due to its reliance on coal and natural gas without the burdens of additional mandates that drive up costs.