Electricity Rates by State in 2026: The Complete Guide

Electricity Prices Are Rising — Here's the Full Picture

The average American household now pays 18.05¢ per kilowatt-hour for electricity, according to the U.S. Energy Information Administration's most recent residential data (February 2026). That figure represents a 5.4% year-over-year increase from 17.13¢/kWh in early 2025 — and a cumulative increase of over 28% from the 14.0¢/kWh national average in 2020.

What you pay per kWh may be the single most important number for understanding whether solar panels or an electric vehicle makes financial sense for your home. At 12¢/kWh, solar's payback period stretches to 15-20 years. At 30¢/kWh, that same system pays back in 6-8 years. The variation is enormous — and so is the variation in rates between states.

This guide provides a current, comprehensive view of residential electricity rates across all 50 states plus D.C., explains why rates differ so dramatically, and explores the implications for clean energy economics.

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The National Average: 18.05¢/kWh in 2026

The national average of 18.05¢/kWh is a useful benchmark but it masks a 3x range from the cheapest to most expensive states. Understanding where your state falls relative to the average is step one in evaluating any clean energy investment.

Key context for the 2026 national average:

• The 5.4% YoY increase was above the 10-year historical average of 2.5%/year
• Extreme weather events (2024-2025 winter and summer) drove up fuel costs for gas peaker plants
• Grid infrastructure investment (transmission upgrades, storm hardening) added to rate bases
• Natural gas prices, which affect approximately 40% of U.S. electricity generation, rose 8% in 2025
• Rate increases were concentrated in New England, the Pacific Coast, and the Mountain West

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The 10 Most Expensive States for Electricity in 2026

High electricity rates are simultaneously a hardship for unassisted households and a powerful economic driver for solar adoption and EV cost savings.

Hawaii leads the nation at 39.89¢/kWh — more than double the national average. Hawaiian Electric's high rates are driven by the islands' geographic isolation (no transmission connections to the continental grid) and historical dependence on oil-fired generation. Solar in Hawaii has extraordinarily fast payback periods: 4-6 years even without incentives. Nearly 40% of single-family homes in Hawaii already have solar.

California at 29.85¢/kWh is the most impactful high-rate state due to its sheer size (39 million people). California's high rates reflect the state's aggressive renewable integration (over 50% renewable energy on many days), the costs of wildfire mitigation infrastructure, and the CPUC's tiered rate structure. Solar adoption in California is among the highest in the nation despite the 2023 net metering changes.

New England states (Connecticut, Massachusetts, New Hampshire, Rhode Island) cluster in the 24-28¢/kWh range due to the region's heavy dependence on natural gas for generation and the region's constrained natural gas pipeline infrastructure, which drives up fuel costs.

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The 10 Least Expensive States for Electricity in 2026

Low electricity rates indicate cheap power — often from abundant hydro, coal, or cheap natural gas. These states offer fewer economic incentives for solar but still support strong EV economics.

North Dakota at 11.93¢/kWh has the nation's cheapest electricity, driven by abundant low-cost coal generation and growing wind capacity. While solar economics are less compelling (moderate sun resource + low rates), EV owners in North Dakota enjoy some of the cheapest charging costs in the country: a full charge on a 75 kWh battery costs just $8.95 at home.

Louisiana and Oklahoma benefit from their proximity to cheap Gulf Coast natural gas, while Washington and Idaho have some of the cheapest hydroelectric power in the world via the Columbia River system.

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Why Do Rates Differ So Much Between States?

A 3.3x range between North Dakota's 11.93¢ and Hawaii's 39.89¢ reflects several structural factors:

1. Fuel Mix for Generation States with abundant hydroelectric power (Washington, Oregon, Idaho) or cheap coal (North Dakota, Wyoming) have structurally low rates. States dependent on natural gas for generation (New England, California) are exposed to gas price volatility.

2. Geographic Isolation Hawaii and Alaska cannot import cheap power from neighboring grids. Every kWh must be generated locally, often with expensive fuel sources, driving costs up dramatically.

3. Renewable Energy Integration Costs California's aggressive renewable mandate has led to significant integration costs — the grid needs expensive storage and backup capacity to manage intermittent wind and solar. Ratepayers bear these costs through higher rates.

4. Infrastructure Investment States with older, dense urban grids (New England, California) face high costs for grid maintenance, hardening against weather events, and undergrounding utilities. These capital costs flow through to rates.

5. Regulatory Structure Investor-owned utilities (IOUs) must earn a regulated return for shareholders — effectively a built-in profit margin in the rate base. Public power utilities (municipal utilities, rural cooperatives) typically charge less because they don't have shareholders to pay.

6. Population Density Rural states with sparse populations spread grid infrastructure costs over fewer customers per mile of transmission line, which should raise rates — but this effect is offset when cheap local generation (hydro, wind, coal) is abundant.

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How Electricity Rates Affect Solar Economics

Electricity rate is the single most powerful variable in residential solar economics. Here's a simple framework:

Annual electricity savings from solar = Solar production (kWh/year) × Electricity rate ($/kWh)

For a 7 kW solar system producing 8,400 kWh/year:

• At North Dakota's 11.93¢: $1,002/year in savings, ~22-year payback on a $22,000 system
• At national average 18.05¢: $1,516/year, ~14-year payback
• At New Jersey's 19.73¢: $1,657/year, ~13-year payback
• At Massachusetts' 25.18¢: $2,115/year, ~10-year payback
• At California's 29.85¢: $2,507/year, ~8-year payback
• At Hawaii's 39.89¢: $3,351/year, ~6-year payback

This is why solar economics in Hawaii and California are nearly always compelling, while solar in low-rate states requires careful analysis. The rate matters more than the solar resource in most cases.

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How Electricity Rates Affect EV Economics

The electricity rate also heavily influences EV fuel cost savings:

Annual EV charging cost = Miles driven ÷ Miles/kWh × Electricity rate

For an EV driving 15,000 miles/year at 3.5 miles/kWh:

• At 11.93¢/kWh: $511/year in electricity costs
• At 18.05¢/kWh (national avg): $773/year
• At 25.18¢/kWh (Massachusetts): $1,079/year
• At 39.89¢/kWh (Hawaii): $1,710/year

Compared to a 30 MPG gas car at $3.50/gallon ($1,750/year in gas):

• Low-rate states (12¢/kWh): EV saves $1,239/year in fuel — a huge advantage
• National average (18¢/kWh): EV saves $977/year in fuel — still significant
• High-rate states (30¢/kWh): EV saves $600-800/year in fuel — more modest but still positive
• Hawaii (40¢/kWh): EV saves just $40/year in fuel vs. $4.80 gasoline — the advantage nearly disappears

The pattern: EVs have the strongest fuel cost advantage in low-rate states (Pacific Northwest, Southeast), and a narrower but still positive advantage in high-rate states where gasoline is also expensive.

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Time-of-Use Rates: The New Standard

A growing number of utilities are moving from flat rates to Time-of-Use (TOU) rate structures, which charge different prices at different times of day. As of 2026, TOU rates are available from most major investor-owned utilities and mandatory for some customer classes in California, Arizona, and Nevada.

Typical TOU structure:

• Off-peak (midnight–7am, weekends): 8-12¢/kWh
• Mid-peak (shoulder hours): 15-22¢/kWh
• Peak (4pm-9pm weekdays): 28-50¢/kWh

TOU rates significantly change the economics of both solar and EVs:

For solar owners: Net metering credits are valued at the time of export. Solar panels produce during mid-day (mid-peak or off-peak hours depending on season) and exports may be valued below retail rates. Using a battery to shift solar production to peak hours can dramatically increase its value.

For EV owners: Charging your EV on off-peak rates can reduce charging costs by 40-60% compared to charging during peak hours. A smart home EV charger that automatically schedules overnight charging can save $400-800/year in high-TOU-differential states.

Use our Rate Plan Optimizer to model how different rate structures — flat, TOU, and tiered — affect your total electricity costs with your specific solar and EV usage profile.

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Rate Trends: What to Expect in 2026-2030

Several structural forces suggest electricity rates will continue rising above the historical 2-4% average through the rest of the decade:

Grid modernization: The U.S. electrical grid requires $2.5-3 trillion in investment through 2030 (EPRI estimates) for transmission upgrades, storm hardening, and EV charging infrastructure. This investment enters the rate base.

Natural gas price uncertainty: Approximately 40% of U.S. electricity is generated from natural gas. LNG export growth has linked U.S. gas prices to global market prices, adding volatility.

Coal plant retirements: As old coal plants retire, they're typically replaced with higher-cost solar, wind, or natural gas combined-cycle plants. The transition period often adds costs.

Climate-driven demand increases: More extreme heat events are driving higher summer peak demand, requiring more expensive peaker generation.

Forecasters broadly expect residential electricity rates to average 3-5% annual increases through 2028 — compared to 2-4% historically. This accelerating rate trajectory makes solar investments increasingly attractive year over year.

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The Bottom Line

Your electricity rate is the most important variable in residential clean energy economics — more important than solar panel efficiency, EV battery size, or charger speed. In 2026, that national average of 18.05¢/kWh — rising 5.4% from last year — is the number that transforms a solar system from a 20-year payback into an 8-year payback and an EV from a marginal savings story into a $1,000+/year fuel winner.

Know your rate. Know your state's trajectory. Model your specific numbers with current data. The tools on this site are built to do exactly that.