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Data shows Louisiana electricity costs increased 7% this year

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(The Center Square) — Electricity costs in Louisiana are up more than 7% in 2023, illustrating what some believe is a need to inject more competition and reduce regulations in the market.

Data from the U.S. Energy Information Administration released on Tuesday shows Louisiana’s average residential price for electricity per kilowatt hour through the first four months of 2023 is 11.98 cents, the second-highest among states in the West South Central region, behind only Texas.

That figure is up from 11.12 cents per kilowatt hour at the same time last year, though it remains well below the national average of 15.82 cents through April 2023. The highest average residential rate nationally comes from Hawaii at 44.17 cents per kilowatt hour, while the lowest is in North Dakota at 9.94.

Compared to neighboring states, Louisiana’s residential rate is higher than Arkansas at 11.92 and Oklahoma at 11.63, but lower than Texas at 14.36 and Alabama at 14.69. A dozen states have average residential rates lower than Louisiana’s.

When the residential rate is combined with commercial, industrial and transportation rates, the overall rate for all sectors in Louisiana is 9.32 cents per kilowatt hour through April, up from 8.90 at the same time in 2022.

Vance Ginn, economist at the Pelican Institute, noted that while there are “so many factors” at play in the energy market, there’s no doubt the more than 7% increase in residential rates is taking a toll on Louisiana customers.

“Louisiana is one of the lowest states … in the nation, which is good, but that doesn’t help Louisianans when their rates are going up,” he said. “Louisiana pay isn’t keeping up with inflation or electricity rates. It’s something Louisiana needs to focus on and get under control.”

Keeping energy costs in check involves ensuring fair competition in the market, without unnecessary government regulations or influence, Ginn said.

“There should be more competition in the energy market and that will influence the electricity rates. Louisiana should make it so there’s more competition between the energy sources … where the government isn’t picking winners and losers,” he said.

A focus on “deregulating where possible” while increasing supply would help to keep rates lower, while tax incentives on the federal and state level for specific sectors, such as renewable energy, can produce the opposite effect and should be avoided, according to Ginn.

“That distorts the overall marketplace,” he said of the incentives.

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