In the first half of 2025, utilities requested record rate increases, totaling $29 billion across the United States. These increasing prices have become a major political talking point in the present election cycle, in the same way that egg prices dominated the last national election.
But what exactly is behind the jump? New research from the Lawrence Berkeley National Laboratory and the Brattle Group unpacks the reasons for recent, not future, retail electricity price trends — and what it found turns much of the energy industry’s conventional wisdom on its head.
Load growth? Actually linked with slightly lower rates. Net metering? Correlated with higher rates, especially in California. State renewables portfolio standards? Also higher rates — and states with market-based renewables adoption have (again slightly) lower rates.
Ultimately, the researchers both found that there isn’t a single factor behind the rising rates; as Michael Thomas, founder of Cleanview and author of the Distilled newsletter, wrote about the report, “surging electricity prices are like Tolstoy’s unhappy families, each unhappy for their own reasons.”
But also the increase might not be as big as it seems. The report’s evaluation of national average nominal retail prices found that when adjusted for inflation, real prices were the same in 2019 as in 2024, and actually 8% lower than in 2010. In nominal terms, however, prices have increased 23% since 2019 and 32% since 2010.
But this is only an average. Many states experienced much more significant price changes than the average. California, the outlier, has seen rates increase by 10.1 cents per kilowatt-hour since 2019; others with large increases include Hawaii (9.5 cents/KWh), Connecticut (5.8 centers/KWh, Massachusetts (5.6 cents/KWh), and Maine (also 5.6 cents/KWh).
And as Charles Hua, CEO of PowerLines, pointed out on a recent episode of Open Circuit, the increase feels significant to the families trying to pay the bills. “Four in five Americans feel powerless over these costs,” he said. “Unlike any other product, you don’t really know how much you’re paying for the product as you’re using it, and so that creates this feeling of frustration from folks where they see their bills spike.”
For more on rising electricity rates, listen to PowerLines CEO Charles Hua’s interview on Open Circuit:
Residential prices have risen more significantly in recent years than commercial and industrial prices: 27% and 19% increases, respectively. The researchers attributed the divergence in part to state regulation: Because policymakers want to support the economic growth that comes from C&I customers, and because those customers advocate for themselves at the state level, they are often able to procure special rate deals.
The load growth question
Those C&I customers, of course, include data centers. The infrastructure to power the artificial intelligence boom has become a flashpoint in places crushed by high bills, with state lawmakers increasingly introducing legislation to shield ratepayers from the expense.
While the assumption today has been that new data centers and manufacturing facilities cause prices to increase, the analysis actually found that “state-level load growth in recent years (through 2024) has tended to reduce average retail electricity prices.”
This is because load growth means that fixed costs, such as grid hardening, are spread out over more demand. It’s not a huge change — a 0.6 cent/KWh reduction in prices on average — but it flies in the face of the energy industry’s conventional wisdom.
“If big tech and their data centers were to blame, you’d expect states like Nebraska and Iowa — where Google is building its largest cluster of data centers — to have some of the fastest growing rates,” wrote Thomas. “But inflation-adjusted rates were negative in both states.”
That said, this is again only at the level of national averages. The researchers make the point, underlined and in bold, that “importantly, this relationship need not always exist: a higher growth future can increase retail prices if new supply and delivery infrastructure is constrained and costly — as it currently appears to be in some or many states.” Reporting by Bloomberg has found that wholesale electricity prices have increased far faster in places near data centers built for artificial intelligence than elsewhere.
“Most of our intuitions and political biases on this topic draw us to the wrong conclusions for a simple reason: electricity ratemaking is complicated,” Thomas added.
Retail rates, storms, and renewables
Beyond load growth, there are several more significant reasons rates are jumping: from “poles and wires” costs rising as utilities upgrade aging infrastructure, to extreme weather recovery and mitigation.
Disasters, which have been worsened by climate change, have required utilities to harden and even rebuild their grids — and they have passed the costs along to ratepayers. Hurricanes have taxed the Southeast, while utilities in the West are grappling with wildfire mitigation.
Meanwhile, the relationship between renewables and electricity prices is nuanced, the researchers found.
“Utility-scale wind and solar deployment does not — alone — appear strongly related to recent electricity prices,” they wrote in the 66-slide presentation summarizing the research. This directly refutes the posture of the Trump administration: that renewables are behind high prices.
That said, states with renewable portfolio standards tended to have higher increases — while the growth of “market-based” wind and solar drives prices down slightly. (They noted that there’s a need for more analysis to unpack the conditions in which wind and solar have impacted prices.) They attribute just a quarter of all utility-scale wind and solar growth in the U.S. to RPS requirements, which appear primarily in blue states.
In the absence of RPS policies, the researchers found, “changes in wind and solar shares did not generally drive retail prices higher.”
Finally, places with net metered solar tend to have higher retail prices overall, though those who adopted rooftop solar as a result of the generous subsidy naturally saw their own bills decrease. According to the study, a five percentage point increase in net metered behind-the-meter solar correlated with an average electricity price increase of 1.1 cents/KWh.
In California, the cost of net energy metered solar has contributed as much as roughly 2 cents/KWh to electricity costs.
It’s important to note that this analysis examines the last five years of electricity changes — not future changes. As Hua said, “there might be a different set of reasons why bills go up in the next five years,” especially given the “unprecedented level of new power plant construction that’s currently being proposed.”
