Why UTC research says electricity affordability in Tennessee has improved
While electricity prices in Tennessee have risen in recent years, the median household in the state is spending a smaller percentage of its income on power than it used to, according to a new report published by the University of Tennessee at Chattanooga.
The median Tennessee household spent 2.6% of its income on electricity in 2024, down from 3.6% in 2010, the report found. Across similar states in the South, the decrease in energy cost burden was smaller.
Households that spend more than 6% of their income on energy are considered to have a high energy burden, according to the U.S. Department of Energy. Around 17% of households in Tennessee have a high or severe electricity burden, the report said.
The report was authored by William Plank, community economist at EPB and a research fellow at UTC’s Center for Regional Economic Research, the center that published the research.
More and more Americans are concerned about rising electricity prices. A Gallup poll earlier this year found that the affordability of energy was as high a concern for Americans as the affordability of owning or renting a home.
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The average price of electricity in the U.S. rose nearly 40% between 2020 and 2025, a “relatively sharp” increase that has outpaced inflation, the UTC report said. The average electric rate increased 41% between 2010 and 2024, the span of years examined in the research.
At the same time, average household incomes increased by 54% and homes used less electricity. The average house in Tennessee consumed 1,393 kilowatt-hours of electricity in 2010 compared with 1,109 kilowatt-hours in 2024, the report found.
“Pain points still exist during summer and winter months as household demand increases to account for heating and cooling needs,” the report said. “Nevertheless, by 2023 and 2024, the energy burden during these months were almost as low as they were during the least burdensome months of 2010.”
Tennessee residents on average rely on electricity to power 66.7% of their home’s energy needs, a relatively high amount compared to other states.
At 12.6 cents per kilowatt-hour, Tennessee had the ninth cheapest electricity in the U.S. in 2024, according to federal data cited in the report. Almost all Tennessee residents use electricity generated by the Tennessee Valley Authority, a federal utility that says its residential electric rates are lower than what customers of 80% of the top 100 U.S. utilities pay.
While affordability is a top concern for Americans, incomes generally rise along with consumer prices during times of inflation, said Howard Wall, director and chief economist at the UTC Center for Regional Economic Research.
“It’s more general than just electricity. We hear about affordability all the time, and it’s unclear what people are actually meaning,” Wall said in a phone call. “When prices go up, your labor that you’re selling is also going up.”
The increase in average household income is typically higher than the increase in prices for consumer goods, Wall said.
The electricity affordability research was published as a white paper, the 18th of its kind to be published by the center. Unlike an article published in an academic journal, white papers are brief musings on research related to a topic of public interest with clear application.
Wall said the center chooses white paper topics based both on what’s interesting to people and what data is newly available. A recent paper found that California topped the list of states people are leaving to move to Tennessee.
“I talk to people at the grocery store and see what people are worried about,” Wall said. “I’m constantly looking for things that are interesting that will help people make decisions or inform something people are talking about.”
Contact business reporter Daniel Dassow at ddassow@timesfreepress.com or 423-757-6318.
Daniel Dassow is a business reporter for the Chattanooga Times Free Press. He earned degrees in English and religious studies from the University of Tennessee, Knoxville in 2023, where he served as editor-in-chief of The Daily Beacon. He previously worked as a tech and energy reporter for the Knoxville News Sentinel. He is the youngest of six siblings. Contact him at 423-757-6318 or ddassow@timesfreepress.com.