The dramatic impact of regional energy price differences. Mitigate their impact with efficient EMS/BMS visibility and control.
We know that energy prices are rising, but there are stark differences between states and regions with regard to how much those prices are rising. And those regional price differences have a significant impact on businesses. To learn why and find out more read on.
It’s readily apparent that energy prices are rising, in fact since 2022 the cost of kWh has risen on average by 6.5%. According to the US Energy Information Administration[1] the US average commercial sector energy price is expected to rise from $0.129 in 2024 to $0.132 per kWh in 2025.
The impact and variance of these price increases becomes even greater depending on the region your sites are in. For example, in the Pacific region, prices have leapt 8% from $0.194 per kWh in 2023 to $0.210 in 2024 while in the West North Central the price has increased by 1% from $0.103 to $0.104 over the last year.
Why the regional variations?
Why do we have regional pricing variations? Several factors are in play, including differences related to energy production sources, local regulatory climates, transportation costs, and market demand. Combined, these can have a substantial impact on businesses, influencing operational costs, competitiveness, and decisions on where to locate or expand operations. Let’s consider them in more detail.
As you’d expect, the availability of natural resources impacts energy prices. States that are blessed with natural gas, coal, or dependable renewable energy sources generally trend toward having lower prices. Texas and Oklahoma, for example, often benefit from lower electricity costs. Conversely, states that rely on importing energy will have higher prices due to added transportation and distribution costs.
Regulations, too, have a part to play in pricing. Energy policies (carbon pricing, renewable standards, environmental regulations, etc.) aren’t created equally so their impact varies from one state to another. For example, California which has strict laws and a cap-and-trade program that drives higher energy costs has an average commercial sector rate (as of Aug 2024) of $0.255 while Texas sits at $0.088 per kWh. This translates to California having energy prices 189% higher than Texas.
Grid infrastructure comes into play too. Those regions with older infrastructure often pass on the cost of needed upgrades and maintenance to consumers. Regional climate plays a part as well. States with extreme climates—hot or cold—tend to have higher energy consumption for heating or cooling, which can drive up demand and prices (think Arizona and Alaska as good examples here) and lead to seasonal price increases and variations.
What’s the impact on businesses?
Operating costs
If your business consumes large amounts of energy the impact of energy price fluctuations will be more significant especially if your portfolio includes data and/or distribution centers. Those higher energy prices will, of course, impact profitability leading to higher product or service costs.
Where to locate?
If you’re thinking about where to locate new facilities or expand existing property portfolios, you may well see energy prices as a critical factor in your decision. States with lower energy costs could be more attractive while states with higher energy prices may face challenges in attracting business expansion.
Supply chain
Companies operating in high-energy-cost regions inevitably face higher prices from their suppliers, particularly if those suppliers are energy-intensive industries. This can have a ripple effect throughout the supply chain, increasing costs for businesses even if they themselves are not energy intensive. Meanwhile, other businesses might choose to locate in more stable, lower cost regions as a way of mitigating the risk of regional energy price fluctuations.
The bottom line is simple enough: energy prices in the U.S. vary widely from state to state and region to region with these variations directly impacting business costs. Understanding regional energy price dynamics is crucial if you want to optimize energy use, control costs, and maintain competitiveness in numerous different markets.
And, of course, what all businesses need is an efficient EMS/BMS solution that can cover all their properties and that’s where NexRev’s multi-site, cloud-based Freedom EMS/BMS can help you manage costs and reduce consumption.
About NexRev
NexRev is the leading provider of cloud-based, multi-site energy management systems, backed by AI and delivered by SaaS models, that help businesses eliminate energy waste and reduce costs.
Our innovative Freedom™ EMS / BMS solution brings process-driven intelligence and AI to facilities management, providing complete remote control and centralized visibility of your energy-consuming devices across complex, nationwide property portfolios for leading brands in retail, theaters, restaurants, commercial, and industrial facilities.
With NexRev Freedom, our customers reduce waste, optimize energy management, and generate permanent cost savings by making the right decisions. To begin a discussion on how we can help you to reduce energy costs and waste please email us at
[1] https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a