If your latest energy bill came as a shock, you’re far from alone.
Energy costs across the US are rising much faster than overall inflation. While consumer prices increased 2.7% last year, electricity prices jumped 6.7%. Fuel oil — the main heating source in the Northeast — rose 7.4%, and natural gas surged 10.8%.
Recent winter storms and blasts of Arctic air are only adding to the pressure. Higher heating demand has already pushed natural gas prices to their highest level since 2022. Growing frustration over utility bills has also caught the attention of politicians. Earlier this month, President Trump said utility costs had risen “MASSIVELY,” pointing the finger at data centers.
The strain is showing up in household finances. Utility debt rose 31% between the end of 2023 and mid-2025, according to the National Energy Assistance Directors Association. Shutoffs are also climbing, reaching an estimated 4 million last year, up from 3.5 million in 2024. But energy experts say no single factor is to blame. Instead, a mix of aging infrastructure, climate-related damage, volatile fuel prices, lingering supply chain issues, and growing demand from data centers is driving bills higher.
Aging Infrastructure
Much of America’s power grid was built more than half a century ago and is nearing the end of its lifespan. Replacing wires, poles, transformers, and towers is costly — and those expenses ultimately land on consumers’ bills.
The Brattle Group estimates spending on aging power transmission infrastructure now exceeds $10 billion annually.
“The distribution system is getting very old,” said Ryan Hledik, a principal at Brattle. “We have parts of the grid that are 80 years old. Utilities need to invest in replacement and maintenance at a level we didn’t face in the past.”
Those costs are being amplified by lingering supply chain disruptions from the pandemic and by tariffs. Prices for equipment such as cables, transformers, switches, and circuit breakers have risen faster than overall inflation for years.
Climate Change
More frequent and severe weather — from hurricanes to wildfires — is also pushing costs higher. Utilities often raise rates or add temporary fees to cover disaster recovery, while long-term investments in more resilient, “hardened” infrastructure add further expense. These costs vary by region. Florida saw temporary price hikes after multiple hurricanes in 2024, while wildfire prevention efforts have contributed to rising bills in Western states, especially California and Hawaii.
Natural Gas Price Swings
Natural gas fuels more than 40% of US electricity generation, and its price is notoriously volatile. Prices typically rise in winter, when gas is also used to heat homes. This winter’s deep freeze across the Midwest and East Coast has sent prices soaring. Beyond seasonal swings, global demand for US natural gas is growing as exports increase. That can tighten supply at home and drive up both gas and electricity prices.
“We’re sending a huge amount of our natural gas to trading partners,” said Benjamin Hertz-Shargel of Wood Mackenzie. “That creates more scarcity domestically, just as demand is rising to power data centers and other large loads.”
Data Center Demand
Data centers have taken much of the blame for rising electricity costs — though experts say they’re not the primary driver yet. They accounted for about 4.4% of US electricity use in 2023, but the Department of Energy projects that figure could climb as high as 12% by 2028. Their rapid growth — and the grid upgrades needed to support it — does add pressure to prices for all customers.
“Utilities are still figuring out how to allocate the costs of expansion,” said energy consultant Matthew McHale. “They’ve never had this level of concentrated demand from a single industry before.”
Some changes may be coming. As public frustration grows, several states are considering new rules to ensure data centers shoulder more of the cost. Microsoft has already said it will pay higher rates for its electricity use and help fund grid upgrades where needed.
Source: yahoo!finance