Impact of Space Heating Options on Electricity Rates and Affordability

Electricity prices have increased in many regions of the U.S., with a national average of 18 cents/kWh projected for 2026, up from 16 cents/kWh in 2020. While the increases can be attributed to a number of factors, increasing electricity use in an efficient and strategic manner - with energy efficient building envelope upgrades and high performance HVAC systems - has the potential to increase revenue for utilities without significantly increasing electricity demand, and therefore could help moderate rate increases. This effect has been studied for electric vehicle charging[1] and dual-fuel heat pumps in Minnesota[2]. Leveraging a recently developed system cost methodology and FERC data on utility revenue, spending, and profits, this poster will present the direction and relative magnitude of rate impacts for efficient space heating upgrades in utility balancing areas across the contiguous U.S., using current prices and showing how the rate impacts would evolve under future grid scenarios.