Electricity bills are skyrocketing across the country and various motives are blamed for the rise – everything from the data center boom to volatile fossil fuel prices to federal policies. But the truth of what’s increasing electricity bills is more complicated than a single reason.
Electricity cost increases are driven by a complex web of factors that differ broadly state by state but broadly speaking states that have invested in efficiency and clean energy have seen less volatility in rates than those that rely upon fossil fuels.
So where are electricity bills rising fastest, what’s driving those rising costs, and what can be done to slow them down?
What shapes your electricity bill
Electricity rates vary widely across the United States and are shaped by gas dependence, infrastructure costs, regulatory decisions, and exposure to volatile fossil fuel markets. However, rates themselves do not provide consumers with the full picture of what makes up their monthly electricity bills.
“Rates” reflect the cost of electricity per a given kilowatt-hour, while “bills” reflect the actual amount you pay for electricity, based on how much electricity you use. Rates include some broader energy costs — like the cost a utility company pays to rebuild its grid after a hurricane or wildfire in addition to the profit a utility company earns on investments. Bills on the other hand will often reflect additional costs that the utility didn’t expect to have, such as higher-than-normal costs for fuels burned to generate power.
While rates have increased nationally, average U.S. household electricity bills have risen more slowly — compared to a 40 percent increase[1] in rates. That’s because energy efficiency improvements and distributed resources have cut overall consumption. When consumers use less electricity from the grid or generate their own power, they pay lower bills, even if rates increase over time. High electricity usage for things like cooling and lack of efficiency investment are why states like Alabama and Texas, which have lower than average electricity rates, have some of the highest electricity bills in the country.
American households paid approximately $110 more in electricity costs[2] in 2025 compared to 2024 — and can expect to see costs rise further this year. According to the U.S. Energy Industry Administration, total average revenues per kilowatt-hour rose 9 percent year-over-year in February.[3]
Several key patterns emerge on a state-by-state basis. High electricity rates include reliance on volatile fossil fuel markets, prolonged dependence on costly coal-fired power plants, extreme weather fueled by climate change, and a utility business model that prioritizes profits over customer affordability.
Natural gas prices drive overall bill increases
Volatile natural gas prices and rising demand are a big affordability factor across America, and both push up fuel costs[4] for electricity generation.
Most states that generate more than half of their electricity from natural gas saw their retail rate increases jump[5] 8 percent or more from 2020-2023 including Connecticut, Delaware, Florida, Nevada, Ohio, Pennsylvania, and Rhode Island.
Meanwhile states with the largest compound annual growth rate from 2010 to 2023[6] included California, Maine, Massachusetts, and New Hampshire, where costs rose more than 4 percent annually due to heavy natural gas reliance. This vulnerability was revealed when Russia invaded Ukraine in 2022, sending shockwaves through global gas markets as Europe cut its dependence on Russian gas and other nations sanctioned its exports, cutting global supplies and immediately increasing U.S. gas prices.
New England is another clear case: Constrained gas supply and price spikes have driven sharp increases in electricity costs. Massachusetts, which generates roughly 60 percent of its electricity from gas, has seen rates rise at nearly double the pace of inflation since 2010. During Winter Storm Fern, electricity prices spiked to $400-$700 per megawatt-hour because of surging demand and gas reliance.
But other regions of the country also suffer from volatile gas prices. California’s grid still relies heavily on gas and its energy prices rose 12 percent from 2020 to 2023[7] because roughly 40 percent of its electricity is generated from gas. And Alabama’s rates are the third-highest in America[8] due to its utilities’ heavy dependence on natural gas.[9]
Costly coal power drags down energy affordability
In other states, utilities continue sinking money into coal plants that cost more to keep running than replacement by new local clean energy resources.[10] Nationally, the cost of generating electricity from coal grew 28 percent from 2021-2024,[11] nearly twice the rate of inflation, adding $6.2 billion to utility customer bills.
The federal government has begun forcing coal plants to stay online past their scheduled retirement dates planned by utilities and their regulators, costing customers more than $315 million[12] as of May 2026. If this pattern continues and plants scheduled to retire between now and 2028 are forced open, ratepayers could pay up to $6 billion annually.[13]
Americans are already feeling the consequences of blocking coal plant retirements. In Michigan, an U.S. Department of Energy order to keep a 60-year-old coal plant online is costing utility Consumers Energy $615,000 per day and $180 million as of March 2025 — costs that will be passed on to customers. In coal-heavy West Virginia electricity rates have surged 73 percent since 2021,[14] sending some companies out of business and driving a significant number of households toward energy poverty.
Extreme weather impacts force costly repairs and price spikes
Worsening extreme weather events caused by climate change are also increasing electricity bills across America. Wildfire costs across the Western U.S., for instance, exceeded $10 billion[15] in 2017, 2018, 2020, and 2021, with many of those costs borne by utility ratepayers.
The costs of repairing wildfire damage and hardening the grid are a significant reason California’s electricity rates have increased. According to the state’s Public Utilities Commission, efforts to reduce wildfire risks in the state that has endured the most destructive wildfire disasters in the country now compose about 16 percent of total utility costs,[16] with $5.5 billion per year coming from consumers’ pockets.
Meanwhile, Southern states are also facing rising costs from extreme weather – the number of billion-dollar weather events nearly tripled in 2020-2024[17] compared to the previous 40 years. Costs of repairing and hardening the grid from increasingly frequent and severe hurricanes gets passed down to customers. Ratepayers in Tampa will pay an average of $20-25 more per month[18] following 2024’s Hurricane Milton, while those in Houston will foot the bill for Hurricane Beryl’s more than $1 billion in damage[19] to the city’s grid infrastructure. Georgia Power filed a request with its regulators to recover nearly $1 billion in storm damages[20] from customers related to Hurricane Helene, and Texas utility customers will have to pay $3.5 billion[21] after Winter Storm Uri spiked gas prices.
Grid costs add up to customer costs
The cost of maintaining and upgrading the grid – and the way utilities are compensated for those services – is a major reason rates are rising. Utilities earn returns on capital investments, which incentivizes large infrastructure spending, even when cheaper solutions exist.
For instance, utilities have dramatically increased spending on transmission and distribution infrastructure, with costs skyrocketing 64 percent[22] from 2016 to 2023 — more than double inflation. But more efficient solutions exist, including squeezing more out of the existing grid or enabling longer-range transmission to unlock cheap wind and solar in far-flung regions.
Prioritizing high-voltage transmission that could bring more cheap renewable energy resources onto the grid and lower wholesale market costs, as well as optimizing current infrastructure through grid enhancing technologies can help lower these rising expenses.
Overcoming barriers to connecting new clean energy can also limit rate increases – modeling suggests that scaling distributed energy — like rooftop solar and battery storage — could save hundreds of billions of dollars[23] by avoiding expensive grid upgrades.
PJM Interconnection, which is America’s largest grid operator spanning 67 million people in 13 states and the District of Columbia, is a standout example of this potential. Power prices surged 49.8 percent in the last five years, but if just 10 percent of the clean energy resources stuck in PJM’s interconnection queue for over five years had been allowed to come online, capacity costs (a large factor in PJM’s rate increases) would have been 20 percent lower,[24] equal to $3.5 billion in costs.
Clean energy drives rates down
Evidence increasingly shows that states investing in clean energy can slow electricity rate increases. Wind and solar have no fuel costs, and their capital costs have fallen dramatically. Today, utility-scale solar and onshore wind are often the cheapest sources of new electricity generation, even without subsidies. And unlike natural gas, they are not subject to global price shocks.
States that have rapidly expanded wind and solar generation — including Iowa, Kansas, Oklahoma, and New Mexico — have seen electricity rates rise more slowly[25] than inflation since 2010. Most states that have seen a more than 20 percent increase in wind and solar generation since 2010 have also seen their costs fall.
That trend is true across geography and political spectrum and includes Colorado, Minnesota, Nebraska, Nevada, North Dakota, South Dakota, Texas, and Vermont. Meanwhile only four states with comparable renewables growth have seen costs rise above inflation: California, Hawaii, Maine, and Massachusetts.
Even where clean energy standards impose costs, they are modest. Renewable portfolio standard compliance costs average about 4 percent of retail electricity bills[26] across states — hardly enough to explain large rate increases.
Federal policy repeals will increase electricity costs across America
These solutions will become increasingly important for states and grid operators over the next decade – federal repeal of clean energy tax credits in the One Big Beautiful Bill Act[27] are a looming threat to increase electricity bills even further by taking away consumer freedom to generate their own electricity and blocking new renewable energy projects.
Nationally, wholesale electricity prices will increase 74 percent and electricity rates paid by consumers will increase 9-18 percent, both by 2035.
While prices will rise across the country, five states will be hit hardest by federal repeals, and consumers will see their electricity bills rise the most as demand grows but cheap clean energy is held back from being built, exposing people to volatile fossil fuel price spikes. Household electricity rates will rise 14 percent in Montana, 18 percent in South Carolina, 18 percent in North Carolina, 43 percent in Kentucky, and 76 percent in Oklahoma.
[1] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[2] Senate Democrats. Broken Promises: Trump’s Broken Promise To Lower Your Energy Bills. Senate Democrats. (2026).
[3] U.S. Energy Information Administration. Electricity Monthly Update. U.S. Energy Information Administration. (May 2026).
[4] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[5] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[6] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[7] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[8] Jennifer Horton. 6 On Your Side Investigates: Alabamians Pay Some Of The Highest Electric Bills In The Country. WBRC 6 News. (November 2025).
[9] Sheree Martin. Why Is Your Power Bill So Dang High?. Energy Alabama. (August 2022).
[10] Eric Gimon, Michelle Solomon, and Mike O’Boyle. The Coal Cost Crossover 3.0. Energy Innovation. (January 2023).
[11] Michelle Solomon. Coal Power 28 Percent More Expensive In 2024 Than In 2021. Energy Innovation. (June 2025).
[12] Sierra Club. How The Trump Admin Is Giving Your Money Away To Fossil Fuel Companies. Sierra Club. (May 2026).
[13] Michael Goggin. The Cost Of Federal Mandates To Retain Fossil-Burning Power Plants. Grid Strategies. (August 2025).
[14] Maggie Manson. Trump Promised To Cut Electric Costs In Half. In Energy-Rich West Virginia, Bills Now Top Mortgages. The Los Angeles Times. (April 2026)
[15] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[16] California Public Utilities Commission. 2024 California Electric And Gas Utility Costs Report. California Public Utilities Commission. (September 2025).
[17] National Center for Environmental Information. Southeast Climate Region Summary. National Center for Environmental Information. (2025).
[18] Senate Democrats. Broken Promises: Trump’s Broken Promise To Lower Your Energy Bills. Senate Democrats. (2025).
[19] Senate Democrats. Broken Promises: Trump’s Broken Promise To Lower Your Energy Bills. Senate Democrats. (2025).
[20] Ryan Krugman. Hurricane Helene Is Headed For Georgians’ Electric Bills. Inside Climate News. (February 2026).
[21] Atmos Cities Steering Committee. Texas Gas Utility Customers Face 16 Years Of Charges For Winter Storm Uri Consumption. Atmos Cities Steering Committee. (November 2023).
[22] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[23] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[24] GridLab. Price Impact Of Additional Renewable & BESS Supply. GridLab. (October 2025).
[25] Brendan Pierpont. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation. (July 2024).
[26] Berkeley Lab: Energy Markets & Planning. Berkely Lab Published Status Update On State Clean Electricity Standards. Berkely Lab. (August 2024).
[27] Robbie Orvis, Megan Mahajan, and Dan O’Brien. Final Analysis: Economic Impacts Of U.S. “One Big Beautiful Bill Act” Energy Provisions. Energy Innovation. (July 2025).
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