Electric bills have skyrocketed 32% since 2014—here’s how it’s hitting your wallet

If your electric bill seems higher lately, you’re not imagining things. The U.S. grid is under pressure, and your utility rate is caught in the crossfire.

Residential electricity rates in the U.S. have climbed 32% in the last decade, according to the U.S. Energy Information Administration (EIA). In 2014, the average price of electricity was just 12.52 cents per kilowatt-hour (kWh)—by 2024, it had reached 16.48 cents.

Since 2022, residential electricity prices have increased faster than the rate of inflation—a trend expected to continue through at least 2026. Rates increased in all 50 states and Washington, D.C. over the last 10 years. California saw the steepest hike at 96%, while Utah’s rates grew just 6.4%. That disparity stems from a range of factors, including each state’s unique energy mix, infrastructure investments, policies, and vulnerability to extreme weather.

Between 2014 and 2024, the average annual electricity price increased in all 50 states and Washington, D.C. Notably, rates grew by 20% or more in 39 states and D.C. and California experienced the most significant increase by a landslide, with electricity prices nearly doubling in a decade. 

“California is a real outlier. If you take California out of the national average, [electricity prices] have gone up at about the rate of inflation,” Severin Borenstein, professor at UC Berkeley Haas School of Business and faculty director of the Energy Institute, told EnergySage regarding California’s shocking rate hikes. “But, that's not to say that other states won't follow California in the future, particularly given data center demand.” 

Top 10 states with the greatest electricity price increases

When you think about what affects the cost of electricity, fuel prices may be the first thing that comes to mind. And while oil and gas prices certainly play a role, they haven’t been the main driver of recent price hikes in the U.S. Instead, delivery charges are racking up Americans’ bills. 

Here's what we mean: Electric bills consist of two main charges—supply and delivery.

• Supply charges cover the actual electricity itself. These charges fluctuate with market conditions, including fuel prices.

• Delivery charges cover the cost of transporting that electricity to your home or business. This includes maintaining and upgrading the poles, wires, substations, and transmission lines that make up the electric grid. Unlike supply charges, delivery charges are often tied to fixed costs.

The main culprit behind many recent rate hikes isn’t the cost of electricity supply itself, but the delivery charges related to its transmission and distribution. Rising electric bills result from an aging, overburdened grid that needs expensive upgrades to adequately deliver electricity. Utilities are investing billions of dollars to modernize and expand the grid system, and those costs are ultimately passed along to customers.

“We certainly point to building out the transmission network as a way to lower prices because it can enable us to move cheap electricity across different regions, but it's a double-edged sword from that perspective,” Christopher Knittel, professor at MIT Sloan School of Management and director of the Climate Policy Center and the Center for Energy and Environmental Policy Research (CEEPR), told EnergySage.“We have an aging infrastructure, so even if we just maintain the status quo, that will lead to higher rates as we renew that infrastructure.”

These fixed infrastructure costs will only play an increasingly significant role in rising electricity rates. At the same time, electricity demand is surging due to growing AI use and electrification, necessitating the construction of new power generation sources. Meanwhile, more frequent and severe extreme weather events are damaging infrastructure, leading to costly repairs.

“California is an outlier, but it's also a harbinger,” Borenstein said. “We have drastically higher rates, but that’s not a function of higher wholesale costs—it’s a result of dealing with climate change. Extreme weather is impacting electricity systems and requires new investments, which feed into rates.”

“I think a lot of other states will soon be there, too,” he said. “Look at the wildfires in Washington and Oregon and the flooding in Texas—to be realistic about increasingly extreme weather, they’re going to have to make more [grid] investments.”

The pressure on the grid—and, in turn, on electricity prices—isn’t letting up. Given the popularity of generative AI models, data center electricity demand is set to grow 130% by the end of the decade. Across the country, new data centers are waiting to be connected to the grid, and many more are in the pipeline.

But the grid simply isn’t ready to handle that demand. New fossil fuel power plants take years to build and connect, extreme weather events continue to cause costly disruptions, and the backlog for grid interconnections is growing. All of this creates a perfect storm that threatens grid reliability and will likely push electricity prices even higher.

“Demand is going up and we're going to need new generation, but there are supply chain bottlenecks,” Knittel said. “Anytime we build a nuclear plant, it takes longer than expected. Even if you’re not worried about climate change, you should embrace renewables just because we need electricity from everywhere.”

Until recently, federal tax credits like the Investment Tax Credit (ITC) helped stabilize electricity prices by incentivizing clean energy development. However, the repeal and roll back of these credits in the One Big Beautiful Bill Act has weakened those signals to investors, making electricity generation more expensive at a time when demand is surging.

“We would expect those federally subsidized renewables to push down prices. Phasing out the investment tax credit and the production tax credit will only raise prices,” said Knittel.

Home solar can protect homeowners from rising electric bills

While policymakers and utilities grapple with long-term fixes, homeowners have a short-term solution: rooftop solar. By going solar, you can lock in lower electricity costs for decades and protect yourself from the volatility of a strained and evolving grid. 

The benefits of residential solar are especially compelling right now. Homeowners who install solar before the 30% federal tax credit expires after December 31, 2025, can take full advantage of one of the last major federal incentives for clean energy.

Either way, as electricity prices rise, the financial case for solar energy only gets stronger.