Your Electric Bill Is Rising Faster Than Inflation. Here’s Why.

This summer I'm turning off our A/C and sleeping out on the fire escape.

Hey, wait a minute. I don't have a fire escape?

Your Electric Bill Is Rising Faster Than Inflation. Here’s Why.

Residential power bills are expected to rise 4% this summer, outpacing other costs

By Jennifer Hiller, WSJ

June 13, 2025 7:00 am ET

America’s power bills are rising even faster than the cost of groceries.

Higher natural-gas prices are partly to blame. Utilities investing billions of dollars to stabilize the aging electric grid are passing those costs on to customers, too. And in some states, huge data centers are pushing power prices higher as electricity supplies tighten.

Electricity prices across the country have increased 4.5% in the past year, according to Labor Department data released Wednesday, topping the 2.2% jump in the price of groceries. More broadly, consumer prices rose 2.4% in May from a year earlier.

Electric bills are expected to keep climbing this summer along with the temperatures. The Energy Information Administration expects the average U.S. residential electric bill to be about 4% higher this summer than last, mostly because of a jump in natural-gas prices, the largest source of power generation. Natural gas deliveries to power plants will cost about 50% more from June through September than last year.

Hugh Wynne, an analyst with Sector & Sovereign Research, said expected increases in liquefied natural gas exports are likely to continue to pressure power prices in the long term. “The more we export gas, the more the domestic price will begin to reflect the international price,” Wynne said.

The EIA expects electricity prices to outpace inflation through next year, a trend that began in 2022 when Russia’s invasion of Ukraine drove up the price of natural gas. Although energy prices receded after the invasion, utilities ramped up their spending to repair the grid and reduce storm-related outages and wildfire risks as well.

AEP transmission tower and power lines in a residential area.

The average household power bill will reach $784 for the combined period from June to September, according to forecasts. Photo: Maddie McGarvey for WSJ

The higher bills are putting a strain on the wallets of consumers who are already stretched thin by rising costs for food, shelter and insurance.

Power bills include the cost of producing and delivering electricity. “On both fronts, there is little reason to believe that ratepayers will see easing pressure on their pocketbooks,” said Akshat Kasliwal of PA Consulting Group, who expects elevated electricity costs for the next 12 to 18 months.

The average household power bill will reach $784 for the combined period from June to September, according to forecasts from the National Energy Assistance Directors Association and the Center for Energy Poverty and Climate. That is up 4.2% from last year when adjusted for inflation.

Mark Wolfe, NEADA executive director, said one of every six U.S. households is behind on their electricity or natural-gas bills. Customers owed gas and electric utilities more than $24 billion in late payments as of March.

Adam Moore, an Evansville, Ind., resident, was among more than 2,300 people who submitted comments last year protesting utility CenterPoint Energy’s plan for rate increases. Regulators ultimately approved the hikes, which initially raised bills this spring by about $5 a month for the typical residential customer. The increase is expected to swell to an average of $26 a month by the end of next year.

“The median income in our area is about $52,000,” Moore said. “That is substantial in our community.”

CenterPoint said its residential electricity bills in Indiana increased by about 1% a year for more than a decade. But higher rates were needed, it said, to cover investments that included grid improvements, smart meters and new solar and natural-gas plants.

Those issues are common across the country. Investor-owned utilities are projected to spend $202 billion on capital projects this year, up 9% from last year and 18% from two years ago, according to the Edison Electric Institute, a utility industry trade group.

In Florida, NextEra Energy’s Florida Power & Light is asking regulators to let it increase rates between 1% and 5% a year through 2029. The utility says it needs to invest in the grid and new generation. Since 2021, its labor costs are up 16%, wires and cables 30%, utility poles 49% and transformers 101%.

The frenzy over artificial intelligence, along with new manufacturing and the adoption of electric vehicles, is helping drive U.S. power demand forecasts higher for the first time in two decades. The U.S. wants to build more gas-fired power plants to meet the soaring demand, but construction can cost three times as much as it did a few years ago, utility executives say.

Across the U.S., the growing pains are sparking fights over how to pay for upgrades and costs.

About $9.3 billion in additional electricity costs will begin trickling down this month to customers in the PJM Interconnection, the country’s largest grid operator and wholesale electricity market.

The main cause is the “unprecedented” demand from new and planned data centers, according to a report from Monitoring Analytics, the independent grid monitor for PJM, which provides power to 13 states and Washington, D.C.

Power plants bid into capacity auctions to deliver electricity when called upon, usually in times of high stress on the grid. PJM’s auction reached a record price last year.

Wires-and-poles utilities pass along the cost of wholesale electricity purchases to customers in the region, though how that is done can differ by utility and state. Pennsylvania’s utility regulators warned residents should consider shopping for lower retail rates or try conserving energy. Rates are set to rise 5% to 16% at most of its utilities, though some could see a jump of more than 30%.

The power industry also warns that a rollback of the clean-energy tax credits offered under former President Joe Biden’s signature Inflation Reduction Act would push electricity prices higher, too. The GOP tax-and-spending bill that is winding through Congress would eliminate those credits earlier than planned.

Write to Jennifer Hiller at jennifer.hiller@wsj.com