Electricity Prices Across the U.S.

Project Overview

Electricity is an essential expense for households and businesses.

Differences in electricity prices can affect:

-Household expenses

-Business operating costs

-Regional affordability

-Energy-policy decisions

-Long-term economic planning

Research Questions

1. How did the average electricity prices at the state-level change from 1990-2020?
2. Which states had the highest and lowest prices in 2020?
3. Did residential differ from commercial and residential?
4. Which states experienced the largest price increases?
5. Were year, consumer sector, and state associated with electricity price?

Data

The data was published by the U.S. Energy Information Administration and accessed through Data.gov

-Time period: 1990-2020

-Geographic coverage: 50 states and Washington, D.C.

-Measurement: Cents per kilowatt-hour

-Original source Form EIA 861

-Unit of observation Annual state-sector-provider price measurement

Source: Annual Electricity Price by State

Dataset variables

Important variables: ‘year’, ‘state’, ‘sector’, ‘provider_type’, and ‘price’.

Data Limitations

• State averages do not represent every individual customer.

• Prices may differ among utilities within the same state.

• Some sectors contained missing or zero price values.

• Missing and zero prices were excluded.

• Prices are nominal and were not adjusted for inflation.

• The dataset does not directly explain why prices changed.

• The analysis identifies associations, not casual effects.

Data Cleaning Process

The original spreadsheet required the following:

1. Skipped the spreadsheet’s introductory title row.
2. Assigned consistent variable names.
3. Converted sector columns fro wide to long format.
4. Converted year and price to numerical variables.
5. Restricted the data to 1990-2020.
6. Excluded missing and zero price records.
7. Added complete state names.
8. Saved the cleaned data as a reproducible CSV.

Analytical Methods

The exploratory analysis included:

-Average and median prices by year

-Consumer-sector comparisons

-State price rankings

-Changes between 1990 and 2020

• Geographic price comparisons

A multiple linear regression examined whether price was associated with:

-Year

-Consumer Service

-State

The primary analysis uses the Total Electric Industry provider category.

Average Price Tred

The average changed from approximately 6.47 cents in 1990 to 11 cents in 2020.

Consumer-Sector Comparison

The highest priced state in 2020 was Hawaii.

State Comparison

The highest-price was Hawaii.

Geographic Distribution

Electricity prices were not evenly distributed across the United States.

Regression Results

After accounting for sector and state, each additional year was associated with an estimated 0.185-cent change in price per kilowatt-hour.

Key Findings

-Average state-level price changed from 6.47 to 11.25 cents per kWh.

• The unadjusted increase was approximately 73.8%.

-Hawaii had the highest total-sector price in 2020.

-Louisiana had the lowest total-sector price in 2020.

-Hawaii had the highest average sector price.

-Hawaii experienced the largest percentage increase among states with data in both years.

Conclusions and Recommendations

Electricity prices differed meaningfully across time, states, and consumer sectors.

Recommendations:

-Use state-specific information instead of relying only on national averages.

-Consider regional affordability when evaluating energy policy.

-Account for different consumer sectors when comparing prices.

-Interpret long-term nominal increases carefully because the valuies were not adjusted for inflation.

-Avoid interpreting the observed relationships as casual effects.

Future analysis could:

-Adjust prices for inflation

-Include electricity-generation sources

-Examine household income and affordability

-Compare regulated and restructured markets

-Add weather and climate information

-Extend he analysis beyond 2020

Sources

-Data.gov: Annual Electricity Price by State

-EIA Historical State Electricity Data

-EIA Form 861