Residential electricity rates are rising as utilities try to keep up with demand from data centers as well as climate change and aging equipment
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Residential electricity prices hit 18/kWh on average in April 2025a 35% increase over five years.
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Utilities requested or received approval for $29 billion in rate increases in just the first half of 2025.
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Data centers, aging infrastructure, extreme heat, and regulatory changes are fueling rising costs nationwide.
Demand for poweris rising steadily and dragging electricity rates along with it. The giant new data centers going up around the country are exacerbating the problem, with many using as much power as a small city. Electricity rates across the U.S. are climbing faster than inflation, causing growing concern for consumers and policymakers alike. In April 2025, the average cost hit 18 cents per kilowatt-hour (kWh)a 35% jump since 2020, and the trend shows no signs of tapering off.
According to the most recent data from the Consumer Price Index, under the Trump administration, electricity prices are up nearly 5 percent from the start of the year and up by almost a full percentage point in June 2025. Prices are expected to climb even further, with the average electric bill in the U.S. during this years air conditioning season projected to hit record highs.
The U.S. Energy Information Administration forecasts continued rate hikes: retail electricity prices are expected to rise 2% in 2025 and surge 13% from 2022 through 2025.EIA also projects increases of up to 18% regionally in 20252026, driven by infrastructure upgrades and rising natural gas costs.
Several factors are fueling the upward pressure:
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Exploding power needs from AI-driven data centers and tech infrastructure, which could absorb up to 9% of all generation by 2030.
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Aging grid infrastructure, with many utilities investing heavily in upgradescosts that are passed directly to customers.
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Severe summer heat waves, which surged peak demand and prompted emergency policy responses by grid operators.
Record rate requests and consumer strain
In the first half of 2025, utilities demanded or secured $29 billion in rate hikes, more than double the amount requested during the same period in 2024. The second quarter alone saw $9billion in requests affecting around 40 million customers, particularly in the South and West, according toPowerLines.
PJM Interconnectionserving 13 states including Virginia, Ohio, and Pennsylvaniawarned that wholesale capacity costs rose sharply in auctions, potentially upping monthly electric bills by 5% for 67 million customers.
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Minnesota leads its region with February 2025 average rates of 14.62/kWh, while Pacific, Mid-Atlantic, and New England residents are bracing for higher-than-average increases (U.S. Energy Information Administration).
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Utilities in states like California and Pennsylvania face public outcry as emergency rate hikes take effect in response to wildfires and infrastructure liabilities.
The policy divide
Policy shifts are reshaping the energy landscape. The Trump administration's "Big Beautiful Bill" rolled back many incentives for renewables, potentially slowing clean energy deployment and raising long-term costs by $40$300 per household annually by 2030.Meanwhile, states like Virginia and Ohio are pushing backproposing new tariffs that would make Big Tech and data center operators shoulder more of the infrastructure burden to shield residential users from rate hikes.
Pressure is also coming from Democrats in Congress.Senator Elizabeth Warren (D-Mass.) and several colleagues wrote to Trump last month, calling for changes in White House Policy.The Administration must reverse its path of increased energy prices and instead work to cut energy costs for American families,wrote the lawmakers.
Despite Donald Trumps campaign promise to cut the price of energy and electricity in half, consumers are facing higher electricity prices than when President Biden left office, the lawmakers said.
At the same time, the Trump Administration is cutting programs that help families afford higher electricity costs and lower their energy usage, all while utility CEOs receive massive payouts, Warren said. A combination of the Administrations regulatory decisions, the impacts of tariffs, and the Administrations reversal of key energy investments is driving up energy bills for Americans around the country.
The lawmakers cited key examples of Trump administration actions which have exacerbated the energy cost crisis, including:
- The Presidents Big Beautiful Bill makes cuts to existing clean energy and manufacturing tax credits that will lead to the estimated loss of 1.6 million jobs and elimination of $980 billion in GDP growth. The final law will result in an estimated $280 increase in average American household energy costs per year over the next decade.
- President Trumps efforts to sell more gas overseas risk creating a domestic price surge due to draining domestic supplies.
- The Trump Administration is forcing states to keep defunct, unwanted, and unneeded coal plants open in several states, foisting tens of millions of dollars of new maintenance and retention costs onto consumers in 15 states.
- President Trumps tariffs policy is increasing costs for building materials for transmission lines and electrical equipment, and virtually every other segment of the supply chain, imposing additional costs on consumers.
- The Administration has proposed entirely eliminating funding for the Low-Income Home Energy Assistance Program (LIHEAP) after firing the entirety of the programs staff, which provides $4 billion in assistance to approximately 6 million low-income families who rely on this funding to pay their utility bills.
- The Energy Department is in the process of rolling back energy efficiency and water conservation standards, which save households close to $600 annually on water and gas bills.
What consumers can do
Amid rising rates, consumers are feeling the squeeze. According to PowerLines, 75% are worried about their utility bills, 80% feel powerless, and two-thirds say higher bills are causing financial stress. Some states are taking actionthough 33 states lack protections against utility shut-offs during summer heatwaves.
That doesn't leave much room for consumers to maneuver, although a new study from Stanford University finds that most U.S. households could reduce their electricity costs and endure power outages by installing rooftop solar panels and battery packs, according to a new Stanford University study, though people may need to buy the equipment by Dec. 31 to cash in on current incentives and rebates.
With electricity rates now rising in most states, shaving utility bills can help people quite a bit, but the ability to ride out local or regional blackouts is becoming very important to many families, said the studys senior author,Ram Rajagopal, associate professor of civil and environmental engineering and of electrical engineering at Stanford. Thats because U.S. electricity infrastructure is old and getting replaced slowly, while the extreme weather events like hurricanes and heat waves that cause blackouts are becoming more frequent, intense, and longer lasting.
Posted: 2025-08-01 18:42:26
