Nine of the ten states with the highest residential electricity prices in 2025 were also in the top ten three decades earlier, according to new analysis from the R Street Institute, a think tank focused on free markets and limited government. The commentary, published this year, challenges claims that electricity market restructuring—reforms adopted by many states in the late 1990s to introduce competition—caused today's high power costs. Instead, the analysis shows the same small group of states remained among the nation's most expensive for electricity throughout a 30-year period that saw major industry changes, including the arrival of wholesale power markets, large wind and solar buildouts, the shale gas boom, and coal and nuclear plant retirements.
The states with the costliest electricity have remained remarkably consistent across three decades. Six New England states, New York, California, Alaska, and Hawaii have stayed among the most expensive year after year. In every year since 1996, eight or nine of the states that appeared in 2025's top ten also showed up in that year's top ten, according to data from the U.S. Energy Information Administration. These persistently high prices were the main driver behind state policymakers' decisions to experiment with industry reforms in the first place—industrial customers feared high costs put them at a competitive disadvantage, while residential customers wanted lower utility bills. Eight of the ten states on the 1996 list, all except Alaska and Hawaii, went on to adopt restructuring reforms designed to introduce competition.
The R Street analysis critiques a recent report from Power for Tomorrow, an organization advocating traditional utility regulation, which divided states into "regulated" and "deregulated" categories and argued that higher prices in its deregulated group demonstrate that restructuring raised costs. However, the 1996 data reveals these same states had higher prices before the reforms took place. The commentary also cites research from the Retail Energy Supply Association showing that average residential rates in retail choice states fell 2.6 percent from 2008 to 2025 when adjusted for inflation, while residential rates rose 8.5 percent in regulated monopoly states over the same period. A 2025 publication by Lawrence Berkeley National Lab found that inflation-adjusted prices fell in 31 of the 48 contiguous states from 2019 to 2024, rose in 17, and were roughly flat in the others, with substantial differences in the factors driving price changes across states.
The report explains that a residential electric bill has three main parts: generation, transmission and distribution lines, and state policy-driven costs. Only power generation is open to competition in restructured states, and generation costs are down. Multiple studies over the years provide clear evidence that wholesale competition reduced power costs—generation units operated more efficiently and lower-cost power plants ran more frequently in regions with competitive markets. The regulated components are where costs have grown fastest: distribution spending rose 160 percent and transmission spending nearly tripled between 2003 and 2023, in both regulated and restructured states alike, according to the Clean Air Task Force. On top of higher transmission and distribution costs, legislatures in many states have chosen to fund energy efficiency programs, demand response, low-income assistance, and other public policy goals through surcharges on the utility bill. Geography and fuel logistics also play important roles—New England states have long relied on imported LNG and fuel oil to generate power during the coldest winter periods, pushing costs higher there, while California utilities have faced substantial costs from wildfires.
Rankings are useful, but they don't tell the whole story. Nine of today's ten most expensive states were already among the ten most expensive in 1996, before residential retail-choice reforms took effect—which means simplistic comparisons of today's prices can't reveal what those reforms actually did to costs. Blaming total electricity prices on competition is like blaming a restaurant's chef for a high bill that's mostly rent, taxes, and a mandatory service charge, the analysis argues.