We dug into the U.S. Energy Information Administration’s data to look at the average monthly electric bill for Indiana 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 Indiana Comparatively High?
The two factors that make up the cost an electric bill are (1) cost and (2) consumption. Looking at each, you may notice the slightly lower price of Indiana’s electricity when compared to other states (4.7%). Keep looking, and you’ll notice the slightly higher electricity consumption of the state (10.1%). Indiana can get quite cold, so proper heating may be to blame for the increased electricity consumption.
Reasons for High Electricity Rates in Indiana
Given that Indiana’s electricity rate is slightly lower than the national average, 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 Indiana
With electrical consumption being marginally higher than the national average in Indiana (10.1%), 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. 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
- Reduce water heating – 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 Indiana Get Its Electricity From?
The EIA pinpoints Indiana as one of the nation’s largest ethanol producers and coal consumers. This news makes it obvious that ethanol and coal are important to Indiana when it comes to electricity, but their importance tends to be understated. In 2018, coal made up 69% of Indiana’s electricity generation.
When it comes to renewables, don’t expect much. Hydroelectric, solar, and biomass combined make up 6% of Indiana’s electrical makeup. Not a number to scoff at, but nothing compared to the amount of coal Indiana burns.
 Data from: https://www.eia.gov/electricity/data.php#sales