Blue States - High Rates Tom Pyle, President, Institute for Energy Research

This is a huge topic for the 2026 political season, and Tom Pyle stops by the Energy Impacts and Energy News Beat Podcast to talk about this report put out by the Institute for Energy Research. This episode will be co-hosted by David Blackmon and Stu Turley as we gear up for the Talking Points on "Affordability."

As we roll into the midterms, the Democrats are already rolling out "Affordability" as a key battle cry. Well, the facts show that the average blue state pays an estimated 37% more for electricity than the average red state.

This podcast went out on the Energy Impacts Podcast with David Blackmon and the Energy News Beat Podcast with Stu Turley. Tom Pyle, the CEO of the Institute for Energy Research, lays out the article linked below, and it is very clear. Energy Policies account for the greatest increases in energy costs.

Ad-Free for our Substack Subscribers

01:25 Intro to the main topic of Blue State and High Rates

02:23 Tom Pyle, breaks down the report

07:16 Wind and solar in Texas

08:43 Graphic on costs in blue vs. red states

14:25 transmission lines and costs

17:24 California and its Energy Crisis

21:02 Energy Policy defines electricity rates

26:54 Jones Act and LNG Tankers

37:33 Carbon Taxes and Net Zero

The main topics discussed in this podcast are:

1. Electricity and energy prices in the United States, particularly the higher costs in "blue" (Democratic-leaning) states compared to "red" (Republican-leaning) states. The transcript discusses a report by the Institute for Energy Research called "Blue States High Rates" that analyzes this trend.

2. The impact of renewable energy policies and mandates, such as renewable portfolio standards, on electricity prices. The transcript argues that these policies, combined with the forced closure of traditional baseload power sources like coal and nuclear, have driven up costs in certain states.

3. The challenges faced by states like California and New York in maintaining reliable and affordable energy supplies due to their aggressive climate and renewable energy policies. The transcript discusses issues like the closure of refineries, reliance on imported energy, and the difficulties in building new natural gas pipelines.

4. The role of the federal government, particularly the Trump administration, in energy policy decisions and their impact on electricity prices. This includes topics like the EPA's endangerment finding and the potential benefits of rescinding it.

5. The broader political and ideological divide between "red" and "blue" states on energy and climate policy, and how this translates into differences in electricity affordability for consumers.

Here is the video with the state prices moving from the Energy Bad Boys, and I added the soundtrack.

Sound UP

Connect with Tom on his LinkedIn here: https://www.linkedin.com/in/thomasjpyle/

Check out the IER Institute for Energy Research https://www.instituteforenergyresearch.org/the-grid/blue-states-high-rates/

From the IER Report:

Expensive Electricity Is A Choice: How States Shape Electricity

The data is clear: bluer states tend to have much higher electricity prices than red states.

More than almost any other product, electricity prices are a direct result of state energy policies because states have the exclusive power to decide which resources supply their grids.

Under the Federal Power Act (FPA), Congress preserved expansive state powers to regulate the electricity generated and sold within their borders. These powers allow states to determine their generation portfolios, site and permit power generation facilities outside nuclear and hydroelectric plants, regulate retail prices, and exercise authority over resource adequacy and reliability, meaning states are charged with ensuring that utilities, and electric cooperatives, often referred to as load serving entities (LSEs), maintain adequate power plant capacity to keep the lights on.

States can also enact energy policies requiring a certain percentage of retail electricity sales in the state to come from renewable generation under a renewable portfolio standard (RPS), or can set energy efficiency resource standards (EERS) or clean energy standards (CES).

The broad authority of states to determine their generation portfolios, set retail electricity prices, and establish mandates for wind and solar generators under the FPA has led to a diversity of policies that ultimately determine the price of electricity for families and businesses in the United States.

For example, Figure 1 shows the average all-sectors electricity price for each state from January 2025 through August 2025. In total, 86% of states with electricity prices above the national average of 13.54 cents per kilowatt hour (kWh) in the continental U.S. are reliably blue, having voted for President Biden in 2020 and Vice President Harris in 2024 (see Table 1 in the Appendix).

According to Lawrence Berkeley National Labs, each of the top five most expensive states for electricity have mandates requiring 100% of their power to come from renewable or carbon-free sources, making their electricity unnecessarily more expensive. These, and other mandates, such as net metering requirements, are driving up prices across America (see Figure 2).

In contrast, eight out of 10 states with the lowest electricity prices are reliably red, and seven of these states have no 100% carbon-free mandates. Additionally, 20 of 25 states with the lowest electricity prices are Red states; only four are blue, and one is purple (see Table 1, Appendix).

State Spotlights

Each state’s energy mix and regulatory structure is unique. The state spotlights below highlight how policies enacted in state legislatures impact the cost of electricity for their constituents.

New York

Federal data show New York’s electricity prices were 58% higher than the national average and 62% higher than Florida’s, based on the average all-sectors rate from January 2025 to August 2025.

Furthermore, a study from the left-leaning Progressive Policy Institute (PPI) found New York has experienced some of the fastest increases in electricity prices in the country. Retail electricity prices for residential customers increased by 36% between 2019 and 2024, nearly three times faster than the national average and the second-fastest increase in the country during this period, after California. PPI determined that electricity is expensive in New York due to a wide range of factors, but the report clearly explains: “The convergence of shrinking supply and rising demand inevitably leads to upward price pressures for consumers. These costs are compounded by the immense capital investment required to transform the grid and specific policy choices that increase the cost of energy production [emphasis added].”

For example, New York’s Climate Leadership and Community Protection Act (CLCPA) constitutes a massive renewable energy mandate, requiring the state to produce 70% of its electricity from renewable sources by 2030 and 100% by 2040, which will require substantial capital investments financed by ratepayers.

At the same time, the state’s firm capacity is being diminished by the premature closure of the Indian Point nuclear power plant, the state’s decision to deny the expansion of needed natural gas pipelines, and the state Department of Environmental Conservation’s decision to block a number of necessary upgrades for natural gas power plants, which the New York Independent System Operator (NYISO) warns could cause an increased risk of power shortages over the next five years.

Prices are also rising in response to state policies mandating the electrification of buildings and transportation, which are straining New York’s already overburdened grid and necessitating additional infrastructure buildouts. The state also suffers from natural gas supply issues due to its decision to ban hydraulic fracturing. In addition, ratepayers effectively pay a tax on carbon dioxide emissions as part of the Regional Greenhouse Gas Initiative. The expenses associated with these policies are projected to be so large that New York Governor Kathy Hochul delayed implementing the state’s capand-tax mandates under the 2019 climate law. The state claimed the regulations would be “infeasible” because they would impose “extraordinary and damaging costs upon New Yorkers.” The Governor has approved two natural gas pipelines as part of a rumored deal with the Trump administration to approve offshore wind facilities.

These policy reversals beg the question: If Democratic policies make energy so affordable, why are they backtracking from them?

California

California’s electricity rates are the second-highest in the nation. Rates are double the national average. Governor Newsom and California’s state legislature have embraced numerous policies that intentionally increase electricity rates, including a carbon dioxide reduction mandate, renewable mandates, solar cost-shifting (net metering), nuclear reactor closures, and EV charging subsidies, to name a few. Instead of trying to expand electricity generation to meet the energy needs of Californians, California is second in the country in electricity imports, as it embeds policy goals in electric rates to drive social policy. This is a toxic mix for California’s ratepayers.

California is second in the nation in total electricity generation from renewable resources and leads the country in utility-scale solar generating capacity. California’s generation mix is 42% natural gas, 39% non-hydroelectric renewables, 12% hydroelectric, and 7% nuclear.

California’s sky-high electricity rates are not the result of scarcity, or being in the middle of the Pacific Ocean like Hawaii, but rather are the direct consequence of policies that deliberately sidelined reliable, conventional fuels (including large hydropower) in favor of mandating and subsidizing preferred renewables. In 2002, Senate Bill (SB) 1078 created the Renewable Portfolio Standard, starting with a 20% renewables requirement by 2017. In 2006, Assembly Bill (AB) 32, the Global Warming Solutions Act, capped greenhouse gas emissions, forcing the state to adopt more wind and solar generation. Billions in rooftop-solar subsidies followed through the California Solar Initiative and other rooftop solar incentives, which have caused massive costshifting. In 2015, SB 350 raised the RPS target to 50% by 2030; in 2018, SB 100 pushed it to 60% by 2030 and 100% “carbon-free” electricity by 2045. In 2020, Governor Newsom issued an executive order creating a goal for all new cars sold in 2035 to be zero-emission vehicles, and the California Air Resources Board implemented that executive order by adopting the Advanced Clean Cars II regulation. The Advanced Clean Cars II regulation required a waiver under the Clean Air Act from the federal government. The waiver was granted by the Biden administration, but Congress later rescinded the waiver. The waiver would have allowed California to set strict emissions standards, forcing more demand on the grid by effectively banning the internal combustion engine in the state. California’s experience demonstrates that aggressive renewable energy mandates and climate policies entail steep costs borne directly by ratepayers. The state’s electricity rates, now double the national average, are not an unfortunate side effect but the predictable outcome of deliberate policy choices that prioritize emissions reduction over affordability.

Florida

Among the nation’s most populous states, Florida is a clear outlier for electricity affordability. Florida ranks as the second-largest electricity producer in the United States, trailing only Texas. Florida’s subtropical climate, characterized by hot, humid summers, mild winters, and a hurricane season, presents unique challenges for providing affordable electricity. Its residential sector stands out nationally: virtually every household relies on electricity for air conditioning, and about 90% use it for home heating. As a result, Florida homes account for 54% of the state’s total electricity consumption, the highest residential share of any state.

Despite these intense demands, Florida delivers electricity at prices 2% below the U.S. average at 13.27 cents per kWh for all sectors. It achieves this mainly by generating 75% of its power from natural gas, even though the state has no significant natural gas production of its own and must import virtually all of it. This traces directly to policy choices made under uninterrupted Republican control of the governorship and both legislative chambers since 1999. During the shale revolution that began around 2008, Florida pursued natural gas generation, raising its share from about 40% in 2005 to 75% today. Florida has been successful by avoiding the aggressive climate mandates adopted by most high-cost blue states. At the same time, the state manages to maintain these relatively low prices despite frequent hurricanes that regularly damage transmission lines, substations, and power plants, forcing ongoing investments in storm hardening and rapid restoration that add to overall grid expenses.

Have an absolutely wonderful weekend! We have lots of great interviews and articles lined up for the next month! This is the craziest news cycle I have ever seen.