Your State Now Sets Your Power Bill More Than Your Building Does. The Gap Is Nearly Threefold.
The average U.S. business paid about 13.5 cents per kilowatt-hour for electricity in the latest federal data, up nearly 5 percent from a year earlier. That national average hides the real story: a business in California pays about 24 cents while one in Texas pays about 8 cents, a gap of roughly three to one, and wider still at the extremes. Where a building sits now shapes its power cost more than how efficiently it runs, which makes location and onsite generation two of the most powerful levers an owner has over the operating statement.
By Keith Reynolds | Publisher & Editor, ChargedUp!
The Average That Hides the Truth
The U.S. Energy Information Administration, the federal statistical agency for energy, put the average commercial electricity price at 13.54 cents per kilowatt-hour in its May 2026 reading, up 4.7 percent from a year earlier, as reflected in federal data. A kilowatt-hour is the unit a utility bills, roughly the energy to run a small office for an hour. The national average is a useful headline and a poor planning tool, because the number a building actually pays depends far more on its state than on that average.
The spread is dramatic. In the same federal data, California commercial power ran about 24.10 cents per kilowatt-hour and New York about 22.40 cents, while Texas sat near 8.26 cents and North Dakota lower still at 7.38 cents, according to EIA Table 5.6.A. That is a gap of more than three to one between the most and least expensive mainland markets. Two identical buildings, one in California and one in Texas, can face power bills that differ by roughly a factor of three, before either owner does anything about efficiency. The gap is driven by each state's fuel mix, its grid infrastructure, and how aggressively its utilities are spending to keep up with demand.
Source: https://www.eia.gov/electricity/monthly/xls/table_5_06_a.xlsx
View data all U.S. states: Download PDF of all state data
Why the Gap Is Widening
The spread is not static. It is widening, because the forces pushing power prices up land unevenly. States absorbing the fastest growth in electricity demand, much of it from data centers, and those spending the most to harden aging grids against extreme weather, are seeing the steepest increases. A building in a high-growth, high-cost state faces a power-cost trajectory over the next five years that looks nothing like one in a low-cost state with surplus generation. Location has always mattered in real estate. What is new is that the power dimension of location now moves fast enough to reshape an operating budget within a single hold period.
This changes site selection in a concrete way. For any power-intensive use, an industrial building, a facility with heavy cooling, a property courting data-center-adjacent tenants, the electricity rate in a given market is now a top-tier variable, not a footnote. A lower rent in a high-power-cost state can be erased by the electricity bill. Underwriting that ignores the state's power trajectory is underwriting with a blind spot.
The Part an Owner Controls: The Peak
State rates set the starting point, but a large share of a commercial bill is within an owner's control, and it hides in a line most tenants never scrutinize: the demand charge. A demand charge is a fee based on the single highest burst of power a building draws, measured over a window as short as 15 minutes, and for larger facilities it can reach 30 to 50 percent of the total electricity bill, according to industry analysis. That means up to half the bill is tied not to how much power a building uses over a month, but to its worst spike.
This is where onsite tools pay off directly. A battery discharges during those peak moments to shave the spike, cutting the demand charge. Load management shifts flexible equipment away from the peak. Onsite solar offsets the daytime draw. Each attacks a different part of the bill, and together they can meaningfully lower it even in a high-rate state. The value math anchors the case: at an 8 percent capitalization rate, the standard yardstick for turning income into value, every $1,000 a building trims from its annual energy cost adds roughly $12,500 to what it is worth.
What to Do With This
Two moves follow. First, treat the state power rate and its trajectory as a core underwriting input, on par with rent and vacancy, especially for any power-hungry building. A market with cheap, stable power is a different investment than one with expensive, fast-rising power, even at the same cap rate. Second, in high-rate states, treat onsite generation and peak management not as green add-ons but as the most direct available hedge against a cost the owner cannot otherwise control.
The national average will keep making headlines. It is close to meaningless for a specific building. The number that matters is the one on the local tariff, and the trajectory it is on. In a country where the power gap between states runs threefold and widening, the owner who reads that gap correctly, and who controls the peak within it, protects the income on which the whole value of the building rests.
Sources
https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
https://commercialenergyadvisors.com/resources/how-much-commercial-electricity-cost-2026/
