Minnesota flunks electricity price ranking, North Dakota excels
The American Legislative Exchange Council released its fourth Energy Affordability Report this month, ranking the 50 states by the weighted average price of electricity. The results truly demonstrate the damage that bad energy policy can inflict on consumers.
The results don’t look good for Minnesota. Minnesota ranked 36th nationwide, with the weighted average retail price of electricity reaching 12.04 centers per kilowatt-hour. The report notes three reported reliability incidents and finds that Minnesota’s renewable portfolio standards and net metering policies drive up costs for consumers.
The report’s summary for Minnesota identifies the state’s policy-driven “increasing reliance on wind and solar” as the reason for both reliability and affordability problems:
Minnesota’s electricity prices rank 36th in the nation, with an average retail price of 12.04 cents per kWh, slightly above the national average. The state’s energy generation is split among coal (29%), wind (27%), nuclear (26%), natural gas (15%), and solar (3%). While this diverse energy mix should ideally offer price stability, the state’s increasing reliance on wind and solar—driven by policy mandates—has added significant costs. Coal and nuclear, traditionally stable and cost-effective energy sources are being phased out in favor of renewables, which require expensive infrastructure investments and ongoing subsidies, ultimately driving up costs for consumers.
Minnesota’s Renewable Portfolio Standard (RPS) and net metering policies have accelerated the shift toward renewable energy but at a steep price for consumers. The RPS forces utilities to invest heavily in wind and solar projects, passing these costs onto ratepayers. Additionally, net metering policies, designed to incentivize small-scale renewable generation, disproportionately shift grid maintenance costs onto consumers who do not participate in these programs. These policies, while well-intentioned, have led to higher electricity prices, undermining affordability for Minnesota residents and businesses.
Despite having only three reported reliability incidents, Minnesota’s push for renewables poses risks to both price stability and grid reliability. The transition away from reliable baseload energy sources like coal and nuclear toward more variable and less predictable wind and solar has increased the financial burden on consumers. As the state continues down this path, the harmful impact of rising electricity costs will be felt more acutely, challenging Minnesota’s ability to maintain affordable energy in the long term.
Neighboring North Dakota has the second-lowest average retail price for electricity, at 8.42 cents per kWh, behind Wyoming at 8.24 cents per kWh. The report praises North Dakota’s energy affordability as a “standout success” due in large part to “the state’s abundant energy resources, particularly its vast lignite coal reserves and natural wind energy potential.” Despite North Dakota having a renewable portfolio standard and net metering as well, reliance on cheap coal for a large portion of its portfolio has allowed it to keep costs low.
It’s even more striking the difference between average prices by state and by sector: residential, commercial, industrial, and transportation. In North Dakota, residential prices were 10.92 cents per kWh, commercial prices were 8.45 cents per kWh, and industrial prices were 7.28 cents per kWh. Contrast with Minnesota, where residential prices were 14.25 cents per kWh, commercial prices were 12.3 cents per kWh, industrial prices were 9.25 cents per kWh, and transportation prices were 10.19 cents per kWh.
The ALEC report concludes:
There is a strong correlation between big government policies and higher electricity costs. When crafting energy and environmental policies, lawmakers should avoid imposing more government control and instead allow markets to adapt, innovate, and improve. This is the more efficient, effective, and cost-saving solution to the environmental challenges we face today.
No state should be making their residents poorer through heavy-handed, top-down energy policies that raise costs, reduce grid reliability, and fail to solve the environmental challenges they purport to solve. Relying on innovation and the free market is a better path toward protecting both consumers and the environment.