Why electricity prices are surging for U.S. households

Electricity prices are rising rapidly for U.S. households, adjacent arsenic wide ostentation has cooled.

Electricity prices roseate 4.5% successful the past year, according to the user terms scale for May 2025 — astir treble the ostentation complaint for each goods and services.

The U.S. Energy Information Administration estimated successful May that retail energy prices would outpace ostentation done 2026. Prices person already risen faster than the wide ostentation complaint since 2022, it said.

"It's a beauteous elemental story: It's a communicative of proviso and demand," said David Hill, enforcement vice president of vigor astatine the Bipartisan Policy Center and erstwhile wide counsel astatine the U.S. Energy Department.

There are galore contributing factors, economists and vigor experts said.

At a precocious level, the maturation successful energy request and deactivation of power-generating facilities are outstripping the gait astatine which caller energy procreation is being added to the electrical grid, Hill said.

U.S. consumers spent an mean of astir $1,760 connected energy successful 2023, according to the EIA, which cited federal data from the Bureau of Labor Statistics.

Of course, outgo tin vary widely based connected wherever consumers unrecorded and their energy consumption. The mean U.S. household paid astir 17 cents per kilowatt-hour of energy successful March 2025 — but ranged from a debased of astir 11 cents per kWh successful North Dakota to astir 41 cents per kWh successful Hawaii, according to EIA data.

Households successful definite geographies volition spot their electrical bills emergence faster than those successful others, experts said.

Residential energy prices successful the Pacific, Middle Atlantic and New England regions — areas wherever consumers already wage overmuch much per kilowatt-hour for energy — could summation much than the nationalist average, according to the EIA.

"Electricity prices are regionally determined, not globally determined similar lipid prices," said Joe Seydl, a elder markets economist astatine J.P. Morgan Private Bank.

The EIA expects mean retail energy prices to summation 13% from 2022 done 2025.

That means the mean household's yearly energy measure could emergence astir $219 successful 2025 comparative to 2022, to astir $1,902 from $1,683, according to a CNBC investigation of federal data. That assumes their usage is unchanged.

But prices for Pacific country households volition emergence 26% implicit that period, to much than 21 cents per kilowatt-hour, EIA estimates. Meanwhile, households successful the West North Central portion volition spot prices summation 8% successful that period, to astir 11 cents per kWh.

However, definite energy trends are happening nationwide, not conscionable regionally, experts said.

Electricity request maturation was "minimal" successful caller decades owed to increases successful vigor efficiency, according to Jennifer Curran, elder vice president of readying and operations astatine Midcontinent Independent System Operator, who testified astatine a House vigor hearing successful March. (MISO, a determination electric-grid operator, serves 45 cardinal radical crossed 15 states.)

Meanwhile, U.S. "electrification" swelled via usage of physics devices, smart-home products and electrical vehicles, Curran said.

Now, request is poised to surge successful coming years, and information centers are a large contributor, experts said.

Data centers are immense warehouses of machine servers and different IT instrumentality that powerfulness unreality computing, artificial quality and different tech applications.

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Data halfway energy usage tripled to 176 Terawatt-hours successful the decennary done 2023, according to the U.S. Energy Department. Use is projected to treble oregon triple by 2028, the bureau said.

Data centers are expected to devour up to 12% of full U.S. energy by 2028, up from 4.4% successful 2023, the Energy Department said.

They're "energy hungry," Curran said. Demand maturation has been "unexpected" and mostly owed to enactment for artificial intelligence, she said.

The U.S. system is acceptable to devour much energy successful 2030 for processing information than for manufacturing each energy-intensive goods combined, including aluminum, steel, cement and chemicals, according to the International Energy Agency.

Continued electrification among businesses and households is expected to rise energy demand, too, experts said.  

The U.S. has moved distant from fossil fuels similar coal, lipid and earthy state to trim planet-warming greenhouse-gas emissions.

For example, much households whitethorn usage electrical vehicles alternatively than gasoline-powered cars oregon electrical vigor pumps versus a state furnace — which are much businesslike technologies but rise wide request connected the electrical grid, experts said.

Population maturation and cryptocurrency mining, different power-intensive activity, are besides contributors, said BPC's Hill.

As energy request is rising, the U.S. is besides having problems comparative to transmission and organisation of power, said Seydl of J.P. Morgan.

Rising energy prices are "all astir infrastructure astatine this point," helium said. "The grid is aged."

For example, transmission enactment maturation is "stuck successful a rut" and "way below" Energy Department targets for 2030 and 2035, Michael Cembalest, president of marketplace and concern Strategy for J.P. Morgan Asset & Wealth Management, wrote successful a March vigor report.

Shortages of transformer instrumentality — which measurement voltages up and down crossed the U.S. grid — airs different obstacle, Cembalest wrote. Delivery times are astir 2 to 3 years, up from astir 4 to six weeks successful 2019, helium wrote.

"Half of each US transformers are adjacent the extremity of their utile lives and volition request replacing, on with replacements successful areas affected by hurricanes, floods and wildfires," Cembalest wrote.

Transformers and different transmission instrumentality person experienced the 2nd highest ostentation complaint among each wholesale goods successful the US since 2018, helium wrote.

Meanwhile, definite facilities similar aged fossil-fuel powered plants person been decommissioned and caller vigor capableness to regenerate it has been comparatively dilatory to travel online, said BPC's Hill. There has besides been ostentation successful prices for instrumentality and labor, truthful it costs much to physique facilities, helium said.