Why electricity prices are rising

Last updated 2026-10-21 with EIA data through July 2026

U.S. home electricity prices have risen +37% since 2015, faster after 2021 than before. Most of the increase is the cost of building and protecting the grid, with natural gas prices and demand growth adding to it.

1. Ten-year price trend

Source: EIA, average residential revenue per kWh (includes fixed charges). Bill column holds usage constant to isolate price.

Prices were nearly flat from about 2014 to 2020, then jumped in 2022 when natural gas prices spiked, and kept rising after gas prices fell back. That pattern points to costs other than fuel.

2. What is driving prices up

Transmission and distribution spending

Utilities are replacing aging poles, lines and substations, adding smart meters and building transmission. These costs go into the "rate base", on which regulated utilities earn an approved return, and are recovered over decades. In many states the delivery portion of the bill has grown faster than the supply portion. Look at your bill: if delivery lines grew more than supply, this is why (how to read your bill).

Wildfire and storm costs

Wildfire mitigation (undergrounding lines, vegetation clearing, insurance, liability) is a major reason California prices are among the highest in the country, and western utilities elsewhere face similar costs. On the Gulf and East Coasts, hurricane restoration and storm hardening are often recovered through separate riders or securitization charges that stay on bills for years.

Natural gas prices

Gas-fired plants generate the largest share of U.S. electricity and often set the wholesale price. When gas prices rise, fuel adjustment charges rise within months. Gas prices rose sharply in 2021 and 2022, fell, and remain a source of month-to-month swings.

Load growth: data centers, manufacturing, electrification

After roughly 15 years of flat demand, U.S. electricity use is growing again, driven by data centers, new factories, and EVs and heat pumps. New demand needs new generation and transmission. Where new large customers do not pay their full share, costs are spread to households.

Capacity market prices

In regions with capacity markets, utilities and suppliers pay generators to be available at peak. In PJM, the grid operator for 13 states and DC from New Jersey to Illinois, the capacity auction for the 2025/26 delivery year cleared at roughly nine times the prior year's price, and the following auction cleared at the price cap. Those costs began flowing into default supply rates in mid-2025 in states such as Maryland, Pennsylvania, New Jersey, Ohio and Delaware.

Inflation and interest rates

Transformers, wire, labor and construction all cost more than before 2021, and some equipment has long backlogs. Higher interest rates raise the cost of the debt utilities use to build, and regulators have approved higher allowed returns in many rate cases.

Policy costs

State programs for energy efficiency, renewables, low-income discounts and plant retirements show up as riders. They are usually a small share of the bill, though they vary widely by state.

3. Where prices are rising fastest

Change in July 2026 vs. a year earlier:

Single-month changes are noisy (weather and billing timing). See every state on electricity rates by state.

4. What households can do

1. Cut the biggest loads first. Heating, cooling and water heating are usually half or more of home use. See summer and winter guides.
2. Shop supply if you can. In choice states a fixed rate locks your supply price; see deregulation explained or Texas plans.
3. Check rate options. A time-of-use plan can pay off if you can shift use.
4. Find waste. Use the home energy audit, standby power and LED savings tools.
5. Consider solar where net metering terms are good: solar savings calculator.
6. Get help if bills are unaffordable. Assistance programs and protections.
7. Comment on rate cases. State commissions take public comments when utilities ask for increases. Notices appear on your bill.

More: how to cut your electric bill.

Frequently asked questions

How much have electricity prices gone up?

The U.S. average residential price rose from 12.65¢/kWh in 2015 to 17.30¢ in 2025, up +37%. At 874 kWh a month, that is a bill of about $151 versus $111. In July 2026 prices were +4.9% from a year earlier.

Will electricity prices go down?

Broad declines are unlikely in the near term. Most of the increase comes from grid investment that is recovered from customers over decades, and demand is growing. Fuel-driven parts of the bill (fuel adjustments) can fall when natural gas prices drop, so individual bills can dip.

Are data centers raising my electric bill?

In some regions, partly. Fast load growth raises wholesale capacity prices and requires new transmission and generation, and some of that cost is spread across all customers. How much depends on your state's rules for charging large new customers. Regulators in several states are now setting special tariffs for large loads.