Does each extra kWh cost more? It depends where you live

Many residential tariffs charge for electricity in blocks: the first few hundred kilowatt-hours each month at one price, the next block at another. Whether the price goes up or down as you climb those blocks decides what an extra hour of air conditioning costs you, and what a kilowatt-hour saved is worth.

Two kinds of ladder

Of 84 utilities with current residential tariffs whose blocks change the price:

• 43 only ever raise the price as usage rises. Regulators use rising blocks to discourage heavy use.
• 23 only ever lower it. Falling blocks are older. They were historically meant to spread the fixed cost of the grid over more usage, and to encourage electric heating.
• 11 do both: prices rise with usage in summer and fall in winter.
• 7 file a mix: some tariffs that rise and others that fall, or ladders that go both up and down within a month.

Where each is found

The split is largely regional.

• Rising is the rule in the West. Every utility with block pricing in our set in California, Arizona, Utah, Washington, Idaho and Nevada raises the price with usage, including Pacific Gas & Electric, Southern California Edison, Tucson Electric Power, Puget Sound Energy and Idaho Power. Consolidated Edison and the Long Island Power Authority in New York, Georgia Power and Hawaiian Electric do the same.
• Falling clusters in the Midwest and South: Ohio Power, Ameren Illinois, Duke Energy Indiana, Union Electric (Ameren Missouri), the Omaha Public Power District, Oklahoma Gas & Electric, Entergy's utilities in Mississippi, Louisiana and Texas, and five electric cooperatives in North Carolina.
• Both is less common. It is the pattern at Westar Energy in Kansas, Kansas City Power & Light in Missouri, Public Service Electric & Gas in New Jersey, DTE Electric in Michigan and CPS Energy in San Antonio.

How big the steps are

• Rising ladders typically step up after 600 kWh a month in summer, and their top block costs about 21% more per kWh than the first. For a household using 1,500 kWh a month, the last kWh costs a typical 13% more than the 300th, and at six utilities 40% or more.
• Falling ladders typically step down after about 635 kWh a month in winter, with the top block about 14% cheaper. At 11 utilities, the 1,500th kWh of a January bill costs at least 20% less than the 300th.

The fixed charge muddies it

A rising ladder does not always mean a rising bill per kWh. Every month's bill also includes a fixed charge, and the more you use, the thinner it is spread. On 78 of 148 tariffs with rising ladders, the all-in price per kWh, fixed charge included, is still lower at 2,000 kWh a month than at 500. Your electricity rate is not what you think it is explains why the price on the tariff and the price you pay come apart.

Why it matters

• A kWh saved is worth the top block, not the average. Insulation, a more efficient air conditioner or solar panels cut your usage from the top down. On a rising ladder, each kWh saved is worth more than your average rate suggests; on a falling one, less. Solar adds a second question, what the power you export earns, which why a smaller solar system pays back faster works through.
• The cheapest tariff depends on how much you use. A tariff with a cheap first block suits a small household, and one with a cheaper top block suits a large one. Your utility probably offers more than one rate.
• Winter can reward heavy use. On a falling ladder, an electrically heated home pays less per kWh the colder it gets. That is by design, and it is also why moving off electric heat can save less than the average rate implies.

How we measured this

• Current tariffs: filed since 2020, priceable from usage alone, priced as a whole home's bill, open to any household and not flagged as a likely data error, the same set this site ranks.
• Block pricing: a ladder counts as rising or falling only when its blocks differ in price by at least 2%. Ladders that step by a fraction of a cent are treated as a single price.
• Direction by season: each tariff's ladder is read for every month of the year. Allowances set per day are converted to monthly ones. For time-of-use tariffs with blocks, we read the ladder in force on a weekday afternoon.
• Counted by utility: a utility whose tariffs all rise counts as rising, and one whose tariffs all fall as falling; a utility with any tariff that rises in summer and falls in winter counts in the group that does both.
• Prices per kWh include the adjustments each filing lists. Fixed charges are left out, except where the all-in price is stated.

What to do with this

Your tariff sheet shows the blocks and where they change. To see what they mean at your usage, open the calculator, choose your utility and enter the monthly kWh from your bill: it prices every current tariff your utility files, blocks and fixed charges included.