Electricity rates can vary 800 percent from one part of the country to another, "more than for any other widely used commodity," according to a study by the Midwest Research Institute.
The independent, nonprofit organization, founded in 1944 in Kansas City, polled 130 private and publicly owned utilities serving towns of 25,000 people or more and covering 70 percent of all residential customers. It found average rates ranging from 1.48 cents per kilowatt hour (kwh) up to 11.8 cents.
Howard Gadberry, MRI's project leader, called that "one of the most surprising results we found," and compared it to finding that gasoline selling for $1.10 in Oregon cost $8.70 in New Jersey.
The major contributor to the highest rates was the "fuel cost adjustment" in which utilities pass on to customers the costs of ever more expensive fuels. The cheapest rates tended to come from utilities in the Northwest or elsewhere producing hydroelectric power, and the highest from old East Coast utilities at least partly chained to use of oil as fuel.
Average monthly power bills ranged from a low of $9.39 for residents of Palo Alto, Calif., to $73.08 in Dallas. House size, insulation, appliances, climate and lifestyle all help determine that bill, Gadberry said. a
"People in some parts of the country use electricity like there is no tomorrow because it only costs them about a penny a kilowatt hour. People in New York pay very high rates but they have relatively low costs because they live in small apartments with several floors to provide insulation, have only one exposure [to the outdoors] and are never home."
The utilities with the highest rates had low-use customers paying an average of $43.55 a month, the study showed, while customers of the 10 utilities with the lowest rates used more than twice as much power but paid less than half as much for it -- only $20.50 a month.
The Washington area ranked in the middle. Potomac Electric and Power Co. customers in the District paid an average cost of $33.41 on a middle-sized amount of power, 512 kwh per month, or 6.5 cents per kwh. In Virginia, customers of Virginia Electric and Power Co. paid more for more power: $60.90 per month on 909.3 kwh, or 6.69 cents per kwh.
The survey also found that 75 percent of the utilities, including Vepco, continue to price electricity so as to encourage more use instead of conservation: they charge less for successively larger blocks of power sold. Only 15 percent, Pepco among them, charge more for higher use rates.