New England’s Rate Design Disconnect: Analyzing the Region’s Wide Variation in Electricity Bills
Maps showing the average monthly customer bill in each New England state (left) and rates per kilowatt-hour for large utilities throughout the region (right).
Household electricity bills vary significantly across the United States, but in no region do they vary as much as in New England. The average household in Massachusetts pays 34 percent more for electricity each month than the average Maine household; the average household in Connecticut pays 60 percent more. This policy brief, first in a series examining electricity rate design in New England, explores some reasons for this variation, but ultimately finds that there is no good reason why bills and rates differ across state lines in the country’s geographically smallest region.
Effective rate design is crucial to achieving regulatory and public policy goals such as the grid modernization of the power sector, yet the variation in household bills reveals a systemic shortcoming. To design more robust rates at prices customers can afford, regulators need better information, including about what other jurisdictions and utilities are doing. One way to obtain it could be through establishing benchmarks and collecting comparable data on utility performance that cross utility and state lines.