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Average Residential Electricity Price per kWh (2016)
In 2016, Tucson Electric Power and Trico Electric Cooperative both served select areas of Pima County and posted average electricity prices consistent with the state of Arizona. Tucson Electric Power had a slightly lower price than the average for Arizona, at 11.5 cents per kilowatt-hour (kWh), while Trico Electric Cooperative had a slightly higher price at 13.0 cents. When comparing the 10 western states in 2016, Arizona had the second highest price with an average price of 12.2 cents per kWh. California posted the highest average electricity price at 17.4 cents per kWh, while Washington State had the lowest price of 9.4 cents per kWh.
Net metering is one way that electricity consumers offset their energy costs with solar, wind, or hydroelectric power. Tucson Electric Power and Trico Electric Cooperative have a similar number of customers who generate their own electricity through net metering when compared to the state of Arizona.
Why is it important?
Utilities are considered natural monopolies, where competition and free-market entry do not exist; therefore, the government regulates electric utilities. Government regulation serves to ensure that service is adequate, companies are responsive, prices are fair, and that the utility sticks to strict safety standards. Even with government regulation, the average price of electricity can vary widely because of variation in the operating costs of the utility. Additionally, prices may vary based on time-of-day pricing and consumer charges.
Electricity use accounts for a large share of household spending. Customers who generate their own electricity through net metering may reduce their utility purchases and sell energy back to a utility. Net metering is one way that electricity consumers are reducing their overall energy costs. Households that participate in net metering typically generate energy through solar collection, but may also use other means, such as wind.
How do we compare?
In 2015, there was significant variation in the average electricity price among utility companies located in Arizona. The highest priced utility, at 16.8 cents per kWh, was Columbus Electric Cooperative, which serves southeastern Arizona and southwestern New Mexico. Tucson Electric Power and Trico Electric Cooperative had average utility prices of 11.5 and 13.0 cents per kWh, respectively.
The number of customers who participate in net metering has been on the rise. Currently, six utilities in Arizona report net metering customers. In 2015, Arizona Public Service Company reported the largest number of net metering customers, with 3,739 per 100,000 customers, while Tucson Electric Power reported 2,415 net metering customers per 100,000.
In 2015, California far surpassed the other western states, with 3,551 net metering customers per 100,000. Arizona ranked second, with 2,483 net metering customers per 100,000, while Texas came in last. The number of residential net metering customers throughout the U.S. increased by 48.8% to 965,058 between 2014 and 2015 (EIA, Electric Power Annual 2015, Table 4.10).
How is it measured?
The U.S. Energy Information Administration (EIA) reports data on the average price of electricity for the U.S., the states, and utility providers. Net metering data is reported to the EIA by each individual utility, which EIA compiles and publishes for the public. The EIA is the statistical and analytical agency within the U.S. Department of Energy. They collect, analyze, and disseminate information that covers the full spectrum of energy sources, end uses, and energy flows. Data is reported monthly and annually.