The cost of energy of all kinds, be it gasoline, diesel fuel, natural gas, heating oil, or electricity, is driven in large part by market forces - and by government interference in markets, via taxation or subsidy. And here's the thing: When those markets are left alone, they generally get things right in the end. That's what markets do; they are self-correcting, at least over the long term.
Now, there's evidence that government interference at the state and local level has a greater effect on electricity prices than many people may think. The war on Iran, yes, has had some deleterious effects on energy prices in general; but that spike will likely be transient. Stupid policies by state and local governments are far more durable. RealClearEnergy's William Murray has some thoughts.
Higher electricity prices and a lack of cheap energy are in the news. Even before the start of the Iran war, consumers over the winter of 2025-2026 experienced some of the highest energy prices on record, especially electricity consumers in the Northeast and New England.
A recent report by the American Legislative Exchange Council, known as ALEC, America’s largest voluntary membership organization for state legislators, shows the problem lies in local politics, not supply and demand. When it comes to electricity prices, there are two types of American states: those that manipulate electricity markets to the detriment of their citizens, and those that do not.
Guess which one of those two types has lower electricity rates. Now, there are other factors, some of which are just good fortune; for example, locations with good sites for hydroelectric power, which is a clean electricity source that actually works, or at least, it did, back when we were still allowed to build dams for water storage and electrical generation.
The cheapest states for electricity – North Dakota at 7.93 cents (kWh), Louisiana at 8.80 cents (kWh) and Nebraska at 9.07 cents (kWh) – get the gold, silver and bronze medals for affordability in this year’s rankings. All three are either natural gas-rich or import low-sulfur coal from neighboring states.
But low electricity prices aren’t just a case of geological inheritance or lucky geography. Blue states like Washington, which placed 13th in the rankings, and Oregon, which placed 22nd, benefit from far-sighted 20th-century leadership that built out massive hydroelectric capacity along the Columbia and Snake River systems. Illinois ranks 31st, having benefited from the construction of 11 commercial nuclear reactors in the 1960s and 1970s. All three have average prices in the 10-, 11-, or 12-cent-per-kilowatt-hour range.
But then, we get into the states with dumb policies.
Meanwhile, all states to the north and east of New Jersey are disappointments. New York, Vermont, Connecticut, Rhode Island, Massachusetts, New Hampshire, and Maine have electricity prices well above the national average. Connecticut, Massachusetts, and Rhode Island each have prices over 23 cents a kilowatt-hour. They’re at the back of the pack.
The ALEC study found that the presence of three pernicious types of legislation in all these places: a Renewable Portfolio Standard (RPS), participation in a carbon cap-and-trade scheme, and statutorily mandated net metering requirements. When implemented together, these laws consistently lead to higher electricity costs.
Markets, when left alone, usually get things right in the end. These states don't seem to get that.
Read More: Wyoming’s Golden Eagles Now Facing Extinction Risk From Wind Farms
New Report: California Energy Prices Could Cost Families Over $1,500 More in 2026
Now, a cursory look at a map of recent election returns and the political makeup of these states' legislatures and governors reveals something else that should come as a surprise to no one who hasn't been living in a remote cabin in Outer Mongolia for the past forty years: The states with stupid electricity generation rules are all blue states.
Why is this important? It's more than just one's electrical bill, although that certainly is important. These blue states (I'm looking at you, California) with stupid electricity price manipulation schemes are also the states that heavily regulate energy from all sources, and which therefore have the highest prices of, well, everything, from gasoline and diesel to electricity. And, of course, the cost of energy is at the heart of everything in every economy, at every level. That's inescapable, and it's a large part of the cause of the Great Sorting, in which people and companies are fleeing the blue states for the red ones. And, of course, most of these stupid blue-state regulations are done in the nebulous name of climate change.
Electricity is not a luxury; it is a necessity. Smart legislation should replace dumb legislation based on a horribly flawed vision of the 21st century. It’s time for state legislators to step up and do what Congress has failed to do: pass affordable, reliable, and clean energy legislation.
These blue states, though? That's unlikely in the extreme. Not until the electorates in those states get good and tired of forking over half a week's pay for a tank of gas, or taking out a second mortgage to keep the lights on. Recent primary elections in jungle-primary California are giving us some mixed indicators as to how likely that may be, at least, anytime soon.
You can read the entire ALEC study here.
