ELECTRIC UTILITY PERFORMANCE: A STATE-BY-STATE DATA REVIEW
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The report includes a composite score and a
corresponding ranking of states and the District
of Columbia from 1 to 51 — or best to worst —for
overall utility performance. This score is an
average of a state’s rankings within those three
core categories of reliability, affordability and
environmental responsibility. These metrics
afford us a consistent scale to quantify and
compare utility performance across the country
over time, pinpointing areas where policymakers
in each state can focus efforts to unleash
untapped potential for lower energy costs, better
electricity service, and a cleaner environment.
Simply put, policymakers can’t improve what
they don’t measure.
By the same token, for states that fare well in
this inaugural edition of the performance
ranking, this report shouldn’t be regarded as a
license to coast. The rankings of states reect their performance relative to each other —but there is ample room for
even the top-performers, both overall and in each of the three component categories, to raise the bar exponentially.
By redoubling their efforts they can harness extra savings for customers, minimize power disruptions even further,
and make the U.S. more resilient against a changing climate.
There is more research to be conducted on the precise socio-demographic characteristics that best explain utility
performance. In future reports we will examine those questions in further detail through econometric analyses. For
now we will highlight a few general observations and conclusions about the results contained in this report:
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While some voices in both the energy industry and political circles have long sought to promote a belief that fossil
fuels contribute to lower electricity costs, the rankings in this report fail to corroborate that relationship. Instead,
states heavily dependent on coal-red electricity, such as West Virginia and Indiana, recorded below-average
affordability.
•
On the surface, at least, the connection between Advanced Metering Infrastructure (AMI) and reliability is not as
strong as one might assume. While states that have launched AMI upgrades, such as Nevada and Florida, do
comparatively well, states like Michigan, Oklahoma, and Ohio that have invested heavily in grid modernization
continue to lag in reliability performance. While likely a necessary condition for future improved resiliency, it
appears that smart grid infrastructure, by itself, is not enough to improve reliability.
•
It is noteworthy that many of the states with the lowest per unit power costs actually have some of the highest
average residential bills. Partly this is due to differences in weather, but energy efciency and other cost-effective
clean energy resources suppress power bills over time, particularly in restructured states. Consumers at the end of
the day pay bills, not rates, so analysis of any program or policy suite must examine the impact over time on energy
bills.
•
Finally, states that tend to be at the top of any one category are often high performers across the board. The same
pattern shows itself for states huddled along the bottom of any metric — they tend to do poorly across all metrics.
While it requires further investigation, this suggests an interrelated socio-policy landscape producing consistent
results.
In 2021, the United Nations’ Intergovernmental Panel on Climate Change declared that the U.S. and the globe were at
a crossroads in efforts to avert the most dire fallout from the carbon emissions unleashed by fossil fuels. That
warning has particularly formidable implications for American electricity production, which accounts for one quarter
of all U.S. carbon emissions, according to the U.S. Environmental Protection Agency (EPA). And it underscores why
the performance of our nation’s electric utilities warrants close and urgent attention.
As the country grapples with the challenge of transitioning to zero-carbon sources of electricity while also protecting
the affordability and reliability of electricity service, we hope that this report helps policymakers identify which states
are headed in the right direction and the policies that are propelling them there.