Business Electricity

business electricity

There are over 20 million businesses in the United States. 90% of these are small, employing less than 500 people. While their electricity consumption varies widely from state to state, the southern states like Arizona or Texas consume about 30% more than northeastern states like Massachusetts or Rhode Island. In fact, the further north one goes the lower the power demand. Businesses in states like Vermont, New Hampshire or Maine on average consume only 3,500 kWh monthly – half the amount of that of Florida, Georgia or Virginia. Some of the usage differences can be attributed to warmer weather, and the higher need for air conditioners throughout a year. Clearly all HVAC systems are powered by electricity, while conventional boilers and heaters require natural gas and oil. On the other hand, the population density, the presence of large cities and the more active lifestyle of the residents account for far larger variance in energy consumption. 

Southerners tend to spend a lot more nights out – going to restaurants, movies, or simply exercising in the neighborhood gyms. Local businesses tend to stay open longer during the day to accommodate the demand. Northern states generally have smaller urban centers, people tend to stay home more, and the small businesses generally have shorter working hours.

Data compiled by EAI shows that average business in US uses 6,300 kWh in electricity monthly. Maryland and DC are the largest when it comes to business electricity consumption with an average monthly usage of over 10,000 kWh. Not surprisingly, businesses in these states have the highest energy bills in the nation. With over $1,000 just for supply portion, their total monthly expense on electricity is well over $2,000. On the other end of the spectrum, businesses in Idaho and Iowa spend the least with an average monthly electric bill of just $900. While one would expect to find a correlation between consumption and price, EAI data does not prove that hypothesis. The likely explanation is that consumption is driven by exogenous factors such as weather, population density, and the lifestyle, while the price is determined by availability and proximity to the power generation facilities.

If one focuses, on factors like population density and lifestyle, the energy spend is the highest in large urban centers. For instance, business electricity consumption in Massachusetts and New York, while lower than in Texas or Florida, is still 70% higher than in other northeastern states. The average business power use in these states is approximately 6,000 KWh monthly, and primarily attributable to the large metropolitan hubs that exist within its borders. New York City is a home to over a million businesses, accounts for ¾ of all electricity demand in the state. According to the research conducted by NYC Mayor’s Office heating, lighting, and appliance use are the three largest areas of energy consumption. Together they represent over 70% of total energy expense by average business in the city. Boston metropolitan area shows similar results.

Table below shows electricity consumption and supply cost by average small business across the US:

Business Electricity Consumption by Average Small Business in US

Source EIA

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