We dug into the U.S. Energy Information Administration’s data to look at the average monthly electric bill for Alaska residential households. These averages are for the full year of 2018, not any specific month of 2019, given that electricity usage & prices fluctuate month-to-month.
Why Are Electric Bills in Alaska Comparatively High?
The two factors that make up the cost an electric bill are (1) cost and (2) consumption. Looking at each, the price of the average monthly electric bill isn’t that special, only suffering a small 6.7% increase in price. However, you’ll notice that the rate is much higher–70.5% greater than the average electric rate. But, with residents consuming 12.5% less electricity, the price of the bills doesn’t suffer that much.
Reasons for High Electricity Rates in Alaska
With an outstanding increase in electric rate when compared to other states (70.5%), it’s important to understand what makes electricity more or less expensive. The factors affecting this number are:
- Supply – an increase in the supply of energy brings costs down. For example, weather events such as high amounts of rain or high wind speeds can temporarily increase the supply of energy where there are hydropower plants or wind turbines to take advantage, and as a result, lower electricity rates.
- Demand – an increase in the demand for energy causes costs to rise. This is because the use of more costly fuels, such as natural gas, help “fill in” for the rise in demand. For example, a heat wave might temporarily increase the demand for cooling and the subsequent need for fuels, and as a result, raise electricity rates.
Additional factors that impact electricity rates include state & federal regulations, global markets and even financial speculation.
Reasons for High Electricity Consumption in Alaska
Because electricity consumption is lower in Alaska than other states (12.5%), it’s important to understand exactly what electricity is used for. The EIA looked at the end uses of electricity in the average American household and found the following breakdown:
“Other uses” includes small electric devices, heating elements, exterior lights, outdoor grills, pool and spa heaters, backup electricity generators, and motors not listed above. This does not include electric vehicle charging.
Tips for Lowering Electric Bill
- Reduce space heating/cooling– Given that heating & cooling make up a large part of the average electric bill, increasing energy efficiency in this area can have arguably the biggest impact on your bill. Here are some things you can do to reduce your usage in this area:
- Use a programmable thermostat (can reduce heating/cooling by ~10%)
- Use extra insulation
- Dress up/down to the temperature
- Replace your air filter more often
- Check seals on windows/doors/appliances for openings/leaks
- Reducewaterheating – One of the next biggest portions of the average electric bill is from water heating, which can be reduced by showering at lower temperatures, taking shorter hot showers and by lowering the temperature on the water heater itself (ideally to 120 degrees Fahrenheit).
- Adjust fridge & freezer temperatures – Ideally, your fridge should be at 38 degrees and your freezer at 5 degrees Fahrenheit.
Where Does Alaska Get Its Electricity From?
Alaska produces a lot of crude oil. However, the state’s main source of electricity is natural gas. Why? According to the EIA, it’s because natural gas is “reinjected into oil fields to help maintain crude oil production.”
Natural gas is therefore used most of the time, while the oil is sold to other states. Alaska plans on generating 50% of its electricity through renewable energy by 2025, however, so we’ll be seeing the use of natural gas go down as time goes on.
 Data from: https://www.eia.gov/electricity/data.php#sales