California vs Texas Electricity Costs

Why the Gap Exists

A 13.84¢/kWh gap is not one state mispricing the same product — the two averages are produced by different systems. Below are the sourced explanations published on each state page, reproduced in full.

Why is California's average electricity price so high?

California's high average is not mainly a story about the cost of producing one more kilowatt-hour. The EIA figure is total residential revenue divided by total residential sales, so it also recovers the cost of delivering power and operating the grid. EIA notes that California has the nation's lowest per-capita electricity use — a mild climate in the most populous coastal areas and decades of efficiency standards keep household consumption comparatively low — which means largely fixed network costs are spread over fewer kilowatt-hours per customer than in high-consumption states. That arithmetic alone pushes the per-kWh average up, even though it says nothing by itself about the size of any individual household's bill.

Supply adds a second layer. California imports more electricity than any other state, and its in-state generation is mid-transition: EIA reports that in 2025 renewable resources, including hydroelectric power and small-scale solar, supplied 62% of in-state generation, with natural gas at 31% and nuclear power at 7%. Transmission, storage, and reliability capacity for that mix — plus wildfire mitigation and grid-hardening programs approved through utility rate proceedings — are paid for through the revenue this average reflects. The result is one of the country's highest per-kWh averages combined with comparatively low usage per person, so the standardized consumption scenarios on this page should not be read as typical bills.

Why does Texas stay below the U.S. average?

Texas runs its power sector at unusual scale and under its own rules. ERCOT, the independent system operator for most of the state, manages power for about 27 million people — roughly 90% of Texas's electric load — on a grid that is largely separate from the two big national interconnections, and it administers retail switching in the state's competitive-choice areas. Texas both produces and consumes more electricity than any other state, and it is a leading producer of two very different fuels at once: natural gas and wind power. That combination — large in-state supply, a competitive wholesale market, and retail choice across much of the state — is the structural backdrop to a statewide average that sits below the national benchmark.

A below-average price is not the same as a below-average bill. Texas summers are long and hot, air conditioning drives household consumption far above the standardized scenarios used on this page, and delivery charges, plan fees, and contract terms differ by provider and territory. Weather is also a real cost risk in the ERCOT market: when supply gets scarce, wholesale prices can spike sharply, even though a monthly statewide average smooths those episodes out. Read the figure on this page as a statistical benchmark for comparing states — not as a quote for any individual Texas plan.