Hawaii residents often hear that the state has the highest electricity rates in the nation. It’s an assertion that you hear in many forums and is being repeated frequently as Hawaii grapples with moving toward more renewable energy sources, including the much-talked-about Big Wind project, solar tax incentives and the biofuels contracts that Hawaiian Electric Co. is trying to line up.
“The cost of electricity in Hawaii is generally higher than on the U.S. mainland because the electric systems on each island are independent,” HECO says on its website. Hawaiian Electric is the state’s major electric utility, providing power to Oahu, the Big Island and Maui County.
Electric rates are generally expressed in a price per kilowatt hour, and Civil Beat compared the residential rates in Hawaii to other places on the mainland. We reviewed national energy reports and talked with utility officials across the country to see if any place had higher rates then the Hawaiian Islands.
First, we surveyed electric rates in Hawaii.
Last month, prices on Oahu hit a record high of 33 cents a kilowatt hour. And Oahu’s electricity rates are lower than on the neighbor islands.
In October, on Lanai, residential rates were 44 cents a kwh; on Molokai and Kauai, 42 cents a kwh; on the Big Island, 40 cents a kwh; and on Maui, 35 cents a kwh, according to electric company data.
We found that generally, Hawaii’s rates were more than double the national average – 27.8 cents per kilowatt hour on average versus 11.5 cents per kilowatt hour for the rest of the country in 2010, according to Electric Choice, a Texas-based energy consulting firm. That means a typical Hawaii resident using 600 kilowatt hours of electricity a month would be paying about $168. By comparison, people paying the national average of 11.5 cents per kilowatt hour would pay $69 a month.
New York had the second highest average rate at 18.6 cents per kwh, followed by Alaska at 16.6 cents a kwh. Washington and North Dakota tied for the lowest rate at 8 cents a kwh.
But that doesn’t mean that there aren’t individual communities that pay more — even far more — than Hawaii residents. Like on Hawaii’s neighbor islands, in remote parts of the country, rates can be much higher than in urban areas.
In Alaska’s remote Lime Village — population 29 — the rate is 94 cents a kwh, according to May 2011 data. This is because diesel fuel has to be flown into the village about 190 miles west of Anchorage in individual barrels, according to David Parrish, an analyst at the Regulatory Commission of Alaska.
While Parrish said that Lime Village was an “outlier,” other rural areas in Alaska also have very high rates.
In the Interior, rates in some places are currently 70 cents to 80 cents a kwh, said Meera Kohler, CEO of the Alaska Village Electric Cooperative. The state subsidizes residential rates in rural areas, bringing the rate down to 22 cents a kwh. If residents’ usage goes beyond a certain point however, which often happens in the winter, they pay the higher rate.
By comparison, in the Alaska cities of Juneau, Anchorage and Fairbanks, the average cost is currently 14 cents a kwh, said Kohler.
Hawaii’s high rates are blamed on the fact that the state depends on imported oil for about 76 percent of its electricity needs. By comparison, less than 1 percent of the mainland’s electricity is derived from petroleum. States began switching to other, cheaper sources after the 1970s Middle East oil crisis sent prices soaring.
But costs can still be high in mainland U.S. cities.
In New York City, residents were paying 28.7 cents a kwh in October, not much less than Oahu’s 33 cents per kwh. Fifty percent of New York’s electricity comes from natural gas and 30 percent from nuclear energy, cheaper sources than Hawaii’s imported petroleum. But residents also pay high taxes and delivery costs that are factored into the rates, according to Chris Olert, a spokesman for ConEdison, the utility company that supplies the city’s power.
In San Diego, residents are currently paying 18.4 cents a kilowatt hour.
In Seattle, where 90 percent of the generation is hydroelectric power, residents pay some of the lowest rates in the country, ranging from 4.6 cents a kwh to 9.6 cents a kwh in October.
Bottom Line: Civil Beat concludes that the conventional wisdom is mostly true. On average, Hawaii does have the highest electricity rates in the country, though there are rural areas, such as the Alaska Bush, where residential electricity rates can surpass even the high rates that people on Molokai and Lanai pay.
DISCUSSION: Do you think Hawaii’s switch to local, renewable energy sources will help bring rates down?
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