Since 2010, the average price of electricity across the United States has risen by almost 30% with no signs of slowing down. This year alone, electric utilities across the nation have requested rate increases totaling $71.2 billion through 2028.As a result, the public has been playing a blame game with prices, pointing the finger at everything from the rise in new AI data centers, grid investments, growth in clean energy, to other sources of electricity demand.But the electricity price story is too complicated to blame just one thing. According to an October study from the Lawrence Berkley National Laboratory and teh Brattle Group, electricity price changes across the U.S. in recent years were driven by a combination of many factors, including infrastructure impacts from extreme weather like wildfires and hurricanes, grid upgrades needed for modernization and resilience, and volatility of fossil-fuel costs.To really understand what’s going on and what’s needed to bring prices down, it’s critical to dive into the details: How does the picture change depending on geography, the type of customer and time frame? What’s influencing rates and what are the actual impacts on power bills?How Are Electricity Prices Changing?At first glance, it seems obvious that electricity prices are increasing across the board — but a closer look reveals important trends and variations at regional, state and local levels. For example, a low-income household in California, an AI-powering data center in Virginia and a small family hardware store in Kansas all experience different rate changes. Even determining the direction of electricity price changes isn’t straightforward. The average retail price for one kilowatt-hour (kWh) of electricity sold in the U.S. has increased by over 30% since 2010. But a lot about the economy has changed since 2010 — adjusting for inflation allows us to account for these changes. In fact, on an inflation-adjusted basis, the average retail electricity price actually declined by 8% from its 2010 level. And since 2019, it’s basically been flat.   The picture gets murkier when looking across types of customers. Unlike many other goods, the price per unit of electricity strongly depends on who is buying it. This is because electricity system costs are allocated across customer categories to ensure that customers pay fairly for the costs they create for the system.After adjusting for inflation, residential customers saw prices rise a half-cent per kWh between 2019 and 2024. For an average household consuming  10,791 kWh per year, that 3% increase amounts to almost $540 a year in additional utility expenses. In contrast, commercial and industrial customers have seen reductions in inflation-adjusted retail electricity prices, with decreases of 0.3 cent per kWh and 0.2 cent per kWh, respectively. But the biggest factor shaping trends? Location. Accounting again for inflation, 32 states saw average retail prices decrease between 2019 and 2024. Even in places with increases in average electricity prices, the amount of change was unevenly distributed — while much of the Northeast saw mild to moderate price increases, California saw a major increase of over 6 cents per kWh. On the surface these patterns could appear to reflect state political leanings — but if only the story were that straightforward. In reality, price changes (whether up or down) are driven by complicated webs of factors from business trends to weather to data center growth — all unique to each state. New construction of data centers in Virginia, like this one in Loudon County, may be contributing to rising electricity prices in the state. Gerville/iStock. What’s Driving High Electricity Prices and What Can Bring Relief?  There’s no single explanation for U.S. price trends across all types of customers in all contexts. Rates are highly regulated by state public service commissions or, for municipal and co-operative utilities, by governing boards — so local economic trends and policy decisions play a major role. It’s also very important to note that these analyses are retrospective. It’s not guaranteed that what caused prices to change from 2019 to 2024 will apply now or the next five years. Already, prices today are about 5% higher than 2024 levels and are expected to continue their upward march in 2026.This problem does not have a one-size-fits-all solution and policymakers will need to look for the signals beneath the noise to provide relief for the people and businesses bearing the brunt of price increases.This makes the conversation more complicated, but the extra bit of effort to understand each context will help decision-makers identify the right solutions. Using the recent Lawrence Berkeley National Laboratory and Brattle Group study, we looked deeper into five historic drivers, the trajectory of current trends, and what policymakers and regulators can do now to bring people real relief.1) Demand for Electricity is Outpacing SupplyIn some places, higher prices can be explained by the law of supply and demand: More electricity is needed than is currently available. In PJM, the regional transmission organization serving the Mid-Atlantic and parts of the Midwest, tight supply and growing demand  have contributed to record prices in the auction for future supply. According to PJM’s independent market monitor, new data centers are largely responsible for this trend, driving a $7.3 billion, or 82% increase, in auction revenues this year alone. Those revenues will ultimately be paid by customers, who are already seeing higher costs from last year’s capacity auction on their bills.These high prices are sending a signal to energy suppliers to bring more resources online to serve these peaks. But Rome was not built in a day, and neither is new power generation. Recent analysis found that new combined cycle gas resources cannot come online until at least 2030, at costs exceeding $2,600 per kW. This is an unprecedented situation that calls for a broader approach to deploying resources like storage, virtual power plants or other emerging alternatives more quickly and cheaply in order to bring some price relief.Over the long term, however, gradual growth in demand doesn’t necessarily mean higher costs in the energy world. In North Dakota, substantial load growth from oil and gas extraction, cryptocurrency, data centers and agricultural processing led to an almost 3 cent per kWh (inflation-adjusted) price reduction for all customers. As demand grew, North Dakota utilities were able to spread fixed system costs across a larger base of demand, lowering the amount each customer must pay. In California, PG&E states that each new gigawatt of customer load could lower customer bills by 1% to 2% by spreading system costs over a larger pool of demand. Here we see that with the right policies, load growth and new demand challenges can actually present an opportunity to address affordability issues.In the face of constrained supply, one way to quickly unlock affordable sources of energy is by removing barriers that limit demand-side resources. Inconsistent rules and inadequate compensation structures hinder the potential of solutions that address the problem by reducing and managing demand rather than building more supply — such as more flexibility at data centers and grid-enhancing technologies. Longer term, the U.S. will need to build new supply and the infrastructure to support it, which means streamlining permitting and review timelines — but in the more medium term, demand-side solutions will be a valuable tool for policymakers.2) An Aging Grid Needs ReplacementIt’s no secret that one of the biggest and most widespread drivers pushing up costs across the country is aging distribution and transmission infrastructure. According to the U.S. Department of Energy, most of the U.S. electric grid was built in the 1960s and 1970s and is now approaching the end of its expected 50- to 80-year lifespan. At the distribution level, utilities report that almost 28% of their spending on local power systems are driven by a need to replace old infrastructure.Replacing aging equipment shouldn’t translate to dramatic rate hikes, as equipment costs are usually amortized, or spread out over time, reducing the burden and creating a more stable rate for customers.  But, the sheer number of needed replacements paired with supply chain constraints from the COVID-19 pandemic have caused a steep increase in component costs, which ramps up spending and ultimately results in rate increases.While some infrastructure will eventually need to be replaced, one near-term solution to reduce new construction all at once is to use advanced conductors or grid enhancing technologies that can expand the capacity of the existing grid more quickly and cheaply.In addition, some states are experimenting with a larger public sector role in financing and building infrastructure to reduce costs. State governments can develop, finance, and/or own new transmission and distribution infrastructure, or they can refinance existing utility assets. Research has shown that approved rates of return for utilities in the U.S. exceed what their risk profile justifies — so regulators can explore reforming how rates of return are set, which would ultimately lower costs for customers.3) Severe Weather and Climate Change Are Driving Up CostsDamage from natural disasters and the need to prepare for severe weather — which has become increasingly frequent, unpredictable and extreme due to climate change — has necessitated significant spending on grid upgrades and modernization. While news coverage of extreme weather events often features images depicting downed power lines, it often fails to capture the money, time and effort that goes into replacing them.   Electric crews respond to downed powerlines after a severe storm. The increasing costs of repairing the grid after storms are contributing to rising electricity prices. Photo by Scott Alan Ritchie/Shutterstock. Nowhere has seen more impact on rates from climate change than California. Wildfire mitigation efforts alone account for $27 billion in costs placed in rates for California utilities between 2019 and 2023. These costs are not just from direct investment in new or updated projects: Rapidly rising insurance costs accounted for 40% of wildfire-related costs between 2019 and 2023. On the other side of the country, utilities from Florida to Maine have increased spending to repair storm damage and prepare for future weather events — costs that are then recovered in rate increases.There’s no denying it: Climate change is already impacting the grid. Electricity system planners must anticipate this reality and shape planning processes accordingly so they can mitigate risks and better manage electricity costs. Meanwhile, policymakers have an opportunity to leverage public financing for climate-related investments and can pursue best practices in mitigation and insurance.4) Fluctuating Natural Gas Prices Lead to More Volatile BillsAs natural gas has overtaken coal to become the single largest source of electricity generation, its prices have played an increasingly large role in electricity rates for consumers. But, natural gas is a famously volatile commodity, and is very vulnerable to big price swings based on industry cycles and global forces.So, it’s not surprising to find that states with higher reliance on natural gas experienced more electricity price volatility in the past 15 years. Unfortunately, the spike in rates due to natural gas costs is unlikely to go away any time soon. The U.S. Energy Information Administration reports that in October 2025 prices were up 45% compared to last year and are expected to climb another 16% by this time next year.Because many utilities can pass 100% of these costs directly to consumers through fuel adjustment charges, natural gas prices have increasingly become a key factor determining retail price. One solution that multiple states have pursued are fuel-cost sharing mechanisms, which require utilities to bear some of the natural gas price risk and incentivizes them to pursue hedging and efficiency strategies. Longer term, policymakers can shield investors and customers from uncertainty by prioritizing clean energy generation that’s not subject to these operating cost fluctuations.5) Cost-Effective Wind and Solar Can Drive Down RatesBeginning in the 1990s, many states began adopting policies meant to jump-start or accelerate clean energy development. One of the most widespread of these policies, introduced by almost half of U.S. states, are clean electricity standards (CES). They require utilities to include certain amounts of renewable or clean electricity in their resource mix.The states that report compliance costs of CES policies found that costs related to adding more clean energy to the mix equated to an average increase in retail rates of about a quarter-cent per kWh between 2019 and 2024 — compared to a national average retail rate of 12.9 cents per kWh. Wind turbines provide energy to homes in Provo, Utah. States implementing clean energy standard policies have seen a decrease in energy costs. Photo by jmoor17/iStock But that’s not the whole story. As a result of supportive public policies like CES, renewable generation sources like solar and wind are increasingly cheap and for years have represented the least expensive forms of energy to develop on average. Between 2019 and 2024, only one quarter of utility-scale wind and solar growth was required by state CES policies — the remaining three quarters was driven by market demand.Further, evidence suggests that market-driven renewable projects may drive retail prices even lower. Similarly, net energy metering policies that allow customers with rooftop solar to sell electricity back to the grid for credit on their utility bills have successfully launched robust markets for distributed energy resources. These policies have become so successful that in some states, rate makers are revising policies to ensure they equitably and effectively serve the priorities and dynamics of the current grid.Because electricity rates directly reflect system costs, increasing the share of cheap renewables should help keep prices in check. Policymakers can build on the successes of net energy metering and CES as they refine policy frameworks for decarbonizing the grid. In this new era, we’ll need creative solutions like clean firm capacity (such as from next-generation geothermal and other technologies) and increased grid-customer engagement through automated demand response functions.As technologies mature, continuous policy fine-tuning will ensure the transition to clean energy remains cost-effective and equitable. In the long run, the evidence clearly shows us that more clean energy means lower system costs and cheaper power bills for consumers.Scapegoats or Solutions?Electricity prices in the U.S. have never been driven by one single factor. They reflect a complex web of economic, policy and environmental forces. While it’s tempting to look for easy answers and scapegoats, the reality is rarely that straightforward.As the U.S. electricity system faces unprecedented challenges, policymakers, regulators and advocates have a choice: chase blame or drive solutions. These groups can bring down prices and bring relief to people who need it most by embracing clean energy, proactive planning and fair policies.

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