North Dakota Electricity Rates: What to Know

North Dakota has some of the cheapest electricity in the United States — consistently ranking first or second lowest among all 50 states. The average residential rate is approximately 11 to 13 cents per kilowatt-hour as of 2026, roughly 31% below the national average of about 17 cents. The average monthly bill of approximately $122 sits well below the national average of about $147. The state sits on the world's largest known deposit of lignite coal, ranks among the top 10 states for installed wind capacity, and benefits from a utility landscape dominated by member-owned cooperatives that operate without shareholder profit pressure.

But cheap does not mean static. Residential rates increased roughly 30% in nominal terms between 2020 and 2024 — though when adjusted for inflation, rates were essentially flat. In February 2026, the PSC approved a 12.92% residential rate increase for Xcel Energy customers, reduced from an original request of 24%. Transmission infrastructure costs are exploding, data center demand is reshaping the region's energy landscape, and the tension between North Dakota's coal economy and neighboring Minnesota's renewable energy mandates is playing out directly in rate cases. Understanding these forces matters, even in a state where electricity bills remain enviably low.

How North Dakota's Electricity Market Works

North Dakota is a fully regulated electricity market. Residential customers cannot choose their electricity provider. You are served by whichever utility — investor-owned, cooperative, or municipal — holds the franchise for your area.

The North Dakota Public Service Commission (PSC) regulates retail electric service for investor-owned utilities only. Three commissioners are elected statewide. The PSC does not regulate rural electric cooperatives or municipal utilities — cooperatives are governed by their own member-elected boards, and municipal utilities answer to city government.

Grid Connections

North Dakota is split between two regional transmission organizations:

MISO (Midcontinent Independent System Operator): Covers the service territories of Otter Tail Power, Montana-Dakota Utilities, Xcel Energy, Great River Energy, Missouri River Energy Services, and Upper Missouri Power Cooperative
SPP (Southwest Power Pool): Basin Electric Power Cooperative and Western Area Power Administration joined SPP in October 2015

Five joint MISO/SPP transmission projects totaling 490 miles enable power flow across the seam between these two regions, spanning North Dakota, South Dakota, Iowa, Kansas, Minnesota, and Missouri.

What North Dakotans Actually Pay

Current Rates

North Dakota's average residential rate of roughly 11 to 13 cents per kWh makes it the cheapest or second-cheapest state in America for residential electricity. Commercial rates are even more attractive at about 7.44 cents per kWh — among the lowest in the nation.

Monthly Bills

The average monthly residential bill is approximately $122, compared to a national average of about $147. The typical North Dakota household uses about 1,085 kWh per month — above the national average of roughly 900 kWh, driven by cold winters and electric heating. But the low per-kWh rate more than compensates for the higher usage.

Rate Trends

The headline number — a 30% nominal increase from 2020 to 2024 — sounds alarming. But context matters: Lawrence Berkeley National Laboratory found that when adjusted for inflation, North Dakota residential rates were flat or slightly lower over that same period. The increases tracked general inflation rather than outpacing it.

Still, recent rate cases represent real cost increases:

Utility	Action	Impact
Xcel Energy	PSC approved 10.37% overall increase (12.92% residential) — Feb 2026	Reduced from original 24% residential request
Otter Tail Power	PSC approved 6.18% net increase — effective March 2025	$13.1 million in new revenue
MDU	6% natural gas increase approved (2024); electric rate case pending	~$3.55/month residential gas increase

Despite these increases, North Dakota's rates remain among the lowest in the nation by a wide margin.

Major Utilities

Xcel Energy (Northern States Power)

Xcel Energy, headquartered in Minnesota, serves approximately 97,000 customers in North Dakota, including the major cities of Fargo, Grand Forks, and Minot. The company's recent rate case was the most contentious in recent state history.

Xcel originally requested a 19.34% overall rate increase (24%+ for residential customers). After extensive proceedings, the PSC approved a 10.37% overall increase (12.92% residential) in February 2026 — cutting the request roughly in half.

The central issue was cross-state cost allocation. The settlement explicitly excludes 23 renewable energy facilities — mostly wind and solar projects in Minnesota — from North Dakota cost recovery. North Dakota's PSC fought to ensure that North Dakota ratepayers do not subsidize Minnesota's renewable energy mandates. Xcel's planned retirement of the Sherco coal units in Minnesota was another flashpoint — North Dakota argued the coal asset should continue producing rather than being retired with transition costs passed to ND customers.

Montana-Dakota Utilities (MDU)

MDU, a subsidiary of Bismarck-based MDU Resources Group, serves western North Dakota and parts of Montana, South Dakota, and Wyoming. The company serves approximately 145,700 electric customers across its multi-state territory.

MDU's 2024 natural gas rate case resulted in a PSC-approved 6% increase (~$3.55 per month for residential). MDU's rate drivers include its 49% ownership in the Badger Wind Project and the rebuilding of the 1944-era Cabin Creek to Baker transmission line. An electric rate case is pending.

Otter Tail Power Company

Otter Tail Power, headquartered in Fergus Falls, Minnesota, serves eastern North Dakota. The company's 2024 rate case resulted in a 6.18% net increase effective March 2025, with a new return on equity set at 10.10% (up from 9.77%). The PSC also approved a Metering & Distribution Technology rider for smart meter upgrades and included a consumer protection mechanism: if Otter Tail's ROE exceeds 10.20%, the company must return 70% of the excess to customers.

Basin Electric Power Cooperative

Basin Electric is the backbone of cooperative power in the region — a not-for-profit generation and transmission cooperative headquartered in Bismarck, owned by 138 member cooperative systems across nine states and serving 3 million consumers. Basin Electric operates 5,217 MW of wholesale generating capability with an 8,427 MW total resource portfolio.

Two major projects are reshaping the state's generation landscape:

Pioneer Generation Station Phase IV (Williston): Completed October 2025 — the largest single-site generation project built in North Dakota in 40+ years. Includes two combustion turbines (~235 MW each), reciprocating engines (~110 MW), and 15 miles of new 345 kV transmission. Total ~600 MW.
Bison Generation Station (Williams County): A $4 billion natural gas-fired plant with ~1,500 MW capacity, targeted for commercial operation in 2030. This will be North Dakota's largest power plant. Peak construction will employ roughly 1,000 workers in 2027.

Basin Electric has also adopted a large load program (June 2025) to manage surging data center and industrial demand without burdening existing cooperative members with stranded-asset risk.

Rural Electric Cooperatives

North Dakota has 17 distribution cooperatives and 5 generation and transmission cooperatives that collectively serve nearly 250,000 North Dakotans. Major distribution cooperatives include Capital Electric (Bismarck), Cass County Electric (Fargo), Burke-Divide Electric (northwest ND), and many others.

Cooperatives are member-owned and not regulated by the PSC. Their not-for-profit model helps keep rates competitive. Wholesale power typically flows through generation cooperatives like Basin Electric and Minnkota Power.

Why North Dakota's Electricity Is So Cheap

1. Abundant Domestic Energy Resources

North Dakota sits on the world's largest known deposit of lignite coal and is the 6th-largest coal-producing state (about 5% of US total). Coal provided roughly 54% of the state's electricity in 2024. Abundant, locally mined fuel keeps generation costs low.

At the same time, North Dakota has exceptional wind resources — 4,729 MW of installed wind capacity across 41 utility-scale wind farms, ranking 9th nationally. Wind provided 35-37% of generation in 2024. Wind energy's near-zero fuel cost further suppresses the average cost of generation.

2. Cooperative Ownership Model

A significant portion of North Dakota's customers are served by member-owned cooperatives that operate on a not-for-profit basis. Without shareholder returns to fund, cooperatives can pass cost savings directly to members. This structural advantage helps keep rates below what investor-owned utilities charge in many other states.

3. Low Population Density

Sparse population means less grid congestion and lower peak demand per mile of transmission. While building infrastructure across vast distances is expensive, the lack of congestion-related costs and the availability of cheap land for generation offset that disadvantage.

4. Generation Mix

Source	Share (2024)
Coal/Lignite	~54%
Wind	~35-37%
Hydroelectric	Small
Natural Gas	Small
Other	Small

Renewable sources generated roughly 40% of in-state electricity in 2024 — almost entirely from wind. The combination of cheap coal baseload and near-zero-fuel-cost wind creates an unusually affordable generation portfolio.

What Could Push Rates Higher

1. Transmission Infrastructure Costs

This is the primary upward pressure. The "exploding costs of transmission and the buildout and replacement of transmission infrastructure" are the biggest driver of residential price increases. MISO's Long-Range Transmission Plan includes 24 projects totaling 3,631 miles in the Midwest subregion, and MISO's board approved a historic $22 billion regional transmission plan. Basin Electric is constructing a 162-mile, 345 kV transmission line from Leland Olds Station to Tande. These costs flow through to ratepayers.

2. Data Center Demand

Minnesota and North Dakota are expected to see an additional 4 GW of demand from data centers by 2044. Basin Electric's $4 billion Bison Generation Station is being built partly to serve this growing demand. Utilities are formalizing large-load policies to manage the surge in requests without burdening existing ratepayers with stranded-asset risk.

The data center story has a positive side too: Applied Digital's data center near Ellendale actually decreased MDU rates by utilizing stranded power capacity. Data centers that absorb excess generation can benefit existing ratepayers. The challenge is ensuring that the infrastructure costs for new demand do not get shifted to residential customers.

3. Cross-State Cost Allocation

The Xcel rate case exposed a fundamental tension: North Dakota ratepayers do not want to subsidize Minnesota's aggressive renewable energy mandates. The settlement excluded 23 renewable facilities from ND cost recovery, but this fight will recur with every future rate case. As Xcel retires coal assets in Minnesota and builds replacement renewable generation, the question of who pays — and whether ND ratepayers bear costs for decisions driven by Minnesota policy — will remain contentious.

4. MISO Capacity Market

MISO's 2025/2026 planning year capacity auction cleared at $660.50 per MW-day for summer — a significant increase that flows through to retail rates. Higher capacity prices reflect tightening supply margins as demand grows faster than new generation comes online.

Understanding Your North Dakota Electricity Bill

Bill Components

Customer charge: Fixed monthly fee (~$10-15/month; Xcel's is $15/month)
Energy charge: Per-kWh rate for electricity consumed
Fuel & Purchased Power Adjustment: Monthly variable charge tracking actual fuel and wholesale power costs — this is a pass-through, not a profit center
Transmission Cost Recovery Rider: Passes through MISO or SPP transmission costs
Environmental/renewable riders: Various adjustments for environmental compliance
Taxes and fees

For a full walkthrough of what each line means, see our guide on how to read your electric bill and spot overcharges.

Time-of-Use Options

Some North Dakota utilities offer optional TOU rates for customers with approved demand-control systems. The typical off-peak period is 10 PM to 6 AM, particularly relevant for electric heating and water heating in North Dakota's cold climate. TOU is optional, not the default.

Fuel Cost Adjustments

The Fuel & Purchased Power Adjustment changes monthly as fuel and wholesale power costs fluctuate. You may see separate charges for current and prior month adjustments. This is a pass-through mechanism — the utility does not profit from it.

Solar and Renewable Energy in North Dakota

The Honest Assessment: Solar Is a Hard Sell Here

North Dakota is one of the most challenging states in the country for residential solar economics. The reasons:

Low electricity rates (11-13 cents/kWh) mean each solar kWh offsets a smaller dollar amount than in high-rate states
Net metering compensates at avoided cost (below retail rate) for investor-owned utility customers — not the full retail rate
Net metering is not available to cooperative or municipal utility customers at all
The 30% federal residential solar tax credit expired January 1, 2026
No state solar tax credit or rebate exists
No SREC market

The only state-level incentive is a 5-year, 100% property tax exemption on the value added by a solar, wind, or geothermal system. Contact your local tax assessor to apply.

For most North Dakota homeowners, solar payback periods are significantly longer than in states with higher rates and better incentives. If you are considering solar, size your system to match your own consumption rather than generating excess — the avoided-cost credit for surplus generation is not attractive.

Wind Is the Real Renewable Story

North Dakota's renewable energy success story is wind, not solar:

4,729 MW of installed wind capacity (March 2026)
41 utility-scale wind farms operating
6th nationally in share of electricity from wind
Wind provided 35-37% of in-state generation in 2024
Major projects include Basin Electric's involvement in the Badger Wind Project and MDU's Cedar Hills and Diamond Willow Repower Projects

Renewable Energy Standard

North Dakota enacted a voluntary objective (not a mandate) in 2007: 10% of retail electricity from renewable and recycled energy by 2015. There are no penalties or sanctions for non-compliance. The state has far exceeded this objective — renewables generated 40% of in-state electricity in 2024, almost all from wind.

Community Solar

North Dakota has no statewide community solar program or mandate. Some cooperatives may offer community solar subscriptions, but availability is limited. This is not a well-developed market compared to neighboring Minnesota or Colorado.

Strategies to Lower Your North Dakota Electricity Bill

1. Take Advantage of Off-Peak Rates

If your utility offers TOU pricing, shift heavy electricity use — electric heating, water heating, laundry, dishwasher — to the off-peak window (typically 10 PM to 6 AM). In North Dakota's cold climate, where electric heating is common, this shift can meaningfully reduce bills.

2. Weatherize Your Home

North Dakota's extreme winters (temperatures below -30F are not uncommon) make weatherization one of the highest-return investments available. Air sealing, insulation upgrades, and window improvements reduce heating energy demand significantly. The Weatherization Assistance Program provides free improvements for qualifying households. Our home insulation and weatherization guide covers the highest-impact projects.

3. Upgrade Your Heating System

If you heat with electric resistance (baseboard heat), a heat pump can cut heating electricity use by 50-70%. Modern cold-climate heat pumps work well even in North Dakota's extreme cold. The combination of lower electricity costs and high heating loads makes heat pump adoption particularly impactful here.

4. Replace Inefficient Appliances

Even at North Dakota's low rates, high-usage appliances add up. Water heaters are the biggest target — a heat pump water heater cuts water heating energy by 60-70%. Old chest freezers, second refrigerators, and aging HVAC equipment are common culprits in North Dakota homes.

5. Install a Smart Thermostat

A smart thermostat with proper setback programming saves 10-15% on heating and cooling. With North Dakota's long heating season, those savings compound over six or more months of the year.

6. Monitor Your Usage

A home energy monitor identifies which circuits draw the most power. North Dakota homes often have electric heating elements, workshop equipment, or agricultural support systems that consume more than expected.

Low-Income Assistance Programs

LIHEAP

North Dakota's LIHEAP program is administered by North Dakota Health and Human Services (HHS) and helps eligible families pay for heating fuels including natural gas, electricity, propane, fuel oil, coal, and wood.

Eligibility: Household income at or below 60% of North Dakota's median income
Emergency assistance: Accepted October 1 through September 30 each federal fiscal year
How to apply: Through the Self-Service Portal (SSP), by printing and mailing, or in person at a local Human Service Zone office
Year-round application for emergency assistance

Weatherization Assistance Program (WAP)

Administered by the North Dakota Department of Commerce and delivered through Community Action Partnership of North Dakota (CAPND).

Services: Home insulation, weather stripping, furnace cleaning/repair/replacement, chimney inspection
Eligibility: Household income cannot exceed 200% of federal poverty level
LIHEAP clients are automatically eligible
Households may receive weatherization services once unless the home was weatherized more than 15 years ago
This is a significant one-time improvement that can permanently reduce energy bills

Getting Started

Contact your local Human Service Zone office or call 2-1-1 for referrals to available assistance programs.

Frequently Asked Questions

Why is electricity so cheap in North Dakota?

North Dakota benefits from abundant domestic energy resources — particularly coal/lignite (the state sits on the world's largest known lignite deposit) and wind energy (4,729 MW across 41 wind farms). The cooperative ownership model for much of the state eliminates shareholder profit from the equation. Low population density keeps grid congestion costs down. About 54% of electricity comes from coal and 35-37% from wind, both providing relatively low-cost generation.

Can I choose my electricity provider in North Dakota?

No. North Dakota is a fully regulated electricity market. You receive service from the utility that serves your geographic area — either an investor-owned utility (Xcel Energy, Montana-Dakota Utilities, or Otter Tail Power), a rural electric cooperative, or a municipal utility. There is no retail choice for residential customers.

Are electricity rates going up in North Dakota?

Yes, but from a very low base. Residential rates increased about 30% nominally between 2020 and 2024, though rates were essentially flat when adjusted for inflation. Recent increases include Xcel Energy's 12.92% residential increase (approved February 2026) and Otter Tail Power's 6.18% increase (March 2025). The primary drivers are transmission infrastructure costs and MISO capacity market changes. Despite increases, North Dakota remains among the cheapest states for electricity.

Is solar worth it in North Dakota?

Solar faces significant headwinds in North Dakota. The federal 30% residential solar tax credit expired at the end of 2025. Net metering is available only to IOU customers and compensates excess generation at avoided cost (below retail), not the full retail rate. There is no state solar tax credit. The only state incentive is a 5-year property tax exemption. With electricity rates of just 11-13 cents per kWh, payback periods are long compared to states with higher rates and better incentives. Wind energy is far more developed and cost-effective in North Dakota.

What is North Dakota's energy mix?

In 2024, coal-fired power plants provided about 54% of North Dakota's electricity, wind energy supplied 35-37%, and the remainder came from hydroelectric, natural gas, and other sources. Renewable sources generated 40% of in-state electricity, almost all from wind. North Dakota is the 6th-largest coal-producing state and ranks 9th nationally in installed wind capacity.

How will data centers affect North Dakota electricity rates?

Data center demand is a double-edged sword. Minnesota and North Dakota could see 4 GW of additional demand from data centers by 2044, requiring massive infrastructure investment. Basin Electric's $4 billion Bison Generation Station is being built partly to serve this growth. However, data centers can also benefit ratepayers — Applied Digital's facility near Ellendale actually lowered MDU rates by utilizing stranded power. Utilities are adopting large-load policies to ensure data center infrastructure costs do not burden existing residential customers.

What assistance is available if I cannot pay my electric bill?

North Dakota's LIHEAP program helps eligible families pay heating and electricity costs. Eligibility is based on income at or below 60% of state median income. Applications are accepted year-round for emergency assistance through the Self-Service Portal or local Human Service Zone offices. The Weatherization Assistance Program provides free insulation, weather stripping, and furnace repairs for households earning up to 200% of federal poverty level. Call 2-1-1 for referrals.

Your North Dakota Electricity Action Plan

This week:

Pull up your most recent bill and identify your energy charge, fuel adjustment, and transmission cost recovery rider. These three components tell you where the money goes. Our guide on how to read your electric bill and spot overcharges explains each line.
Check your 12-month usage history. Note winter peaks — they reveal how much your heating system is costing.
If your utility offers TOU pricing, check whether your current plan takes advantage of off-peak rates for heating and water heating.

This month:

If your income qualifies, apply for LIHEAP through the Self-Service Portal at HHS. Emergency assistance is accepted year-round.
Ask about Weatherization Assistance through Community Action Partnership of North Dakota. Free insulation, weather stripping, and furnace improvements can permanently reduce your heating costs.
Seal air leaks around windows, doors, attic hatches, and plumbing penetrations. At North Dakota's temperatures, air sealing has an outsized impact.

This year:

If you heat with electric resistance, research heat pump options. Cold-climate heat pumps cut heating electricity by 50-70% — a significant savings even at North Dakota's low rates.
Replace your water heater with a heat pump water heater if you heat water electrically.
Install a smart thermostat with winter setback programming.

If you are struggling right now:

Apply for LIHEAP emergency assistance year-round through the Self-Service Portal or your local Human Service Zone.
Contact your utility about payment arrangements. Do not wait for a disconnection notice.
Call 2-1-1 for local assistance referrals.

For the long term:

Watch transmission cost trends. MISO's $22 billion regional transmission plan will flow through to North Dakota ratepayers over the coming years. This is the single biggest cost pressure on the horizon.
Follow the cross-state cost allocation fight. As Xcel retires coal in Minnesota and builds replacement renewables, the question of whether North Dakota ratepayers help pay for Minnesota's energy transition will recur in future rate cases.
Monitor data center developments. Basin Electric's Bison Generation Station and the large-load policies adopted by cooperatives will determine whether data center growth benefits or burdens existing ratepayers.
Even at the cheapest rates in the country, efficiency improvements save money. Every dollar you do not spend on electricity is still a dollar — and as transmission costs rise, today's efficiency investments become more valuable over time.

North Dakota's electricity advantage is real and substantial. The combination of abundant coal and lignite, exceptional wind resources, and a cooperative-dominated utility landscape creates electricity costs that most states can only envy. But that advantage is not guaranteed to last. Transmission infrastructure costs are surging, data center demand is reshaping the region's energy economy, and the tension between North Dakota's energy priorities and neighboring states' climate mandates shows no signs of easing. The rates are still the cheapest in America. The question is how long that remains true — and how much of the gap closes over the coming decade. In the meantime, every efficiency improvement you make stretches that advantage further.