Why is your energy bill suddenly much more expensive

Americans pay more for electricity and these prices should increase even more.

In almost all parts of the country, the amount that people pay for electricity on their electricity bills – the retail price – has increased more quickly than the inflation rate from 2022, and this will probably continue until 2026, according to the Energy Information Administration, or EIA.

About everything costs more these days, but the prices of electricity are particularly worrying because they are a contribution for a large part of the economy – the supply factories, the data centers and a growing fleet of electric vehicles. These are not only large industries; We all feel the pinch of first -hand when we pay our public service bills. According to power lines, a non -profit organization working to reduce electricity prices, around 80 million Americans must sacrifice other basic expenses such as food or medicine to allow themselves to keep the lights on. And it is about to get worse: public services on the markets across the country have asked regulators of almost $ 29 billion in increased electricity rates for consumers for the first semester.

Why do prices increase so suddenly? Currently, there are the usual factors that stimulate the increase in electricity rates: high demand, not enough offer and inflation. But there are also problems that have also developed for decades, and now the invoices are due: inadequate aging and infrastructure must be replaced, while the outdated models and regulations have slowed down the deployment of urgent necessary upgrades.

On the campaign track, President Donald Trump promised to reduce energy prices by increasing the extraction of fossil fuels. “My goal will be to reduce your energy costs by half within 12 months after taking office,” said Trump last August in a speech in Michigan.

But electricity prices are increasing, and Trump’s signature legislative completion, Big Beautiful Bill Act, is likely to increase prices more. Without better management and investment, the result will be a more expensive and less reliable power for most Americans.

The variables have been paired in your electricity bill, explained

There are several key factors that shape the quantity you pay for electricity.

There is the cost of the construction, operation and maintenance of power plants. Higher interest rates, inflation, prices and longer interconnection queues – electricity generators waiting for approval to connect to the network – make the construction process of a new generator of electricity slower and more expensive. PJM, the largest electricity market in the United States, said this week that demand for electricity demand and delays in the construction of new generators will increase electricity bills from 1% to 5% for customers in its service area in 13 states and the Columbia district.

Then there is the fuel itself, whether it be coal, oil, natural gas or uranium. For renewable energies, the cost of wind, water and sun is close to zero, but intermittent generators need power plants or conventional energy storage systems to save them. However, wind and solar energy have been some of the cheapest sources of electricity in recent years, forming the dominant part of the new electricity production connecting to the network.

This electricity must then be transported from power plants on transmission lines which can extend over hundreds of kilometers and in distribution networks which send electrons to houses, offices, shops and factories.

Then you have to think about demand, during the hours, days, months and years. Some public services offer invoicing of the time of use that increases rates during peak demand periods and hot summer afternoons and lowers them in the evening. Cooling needs are a great reason why overall electricity consumption tends to be higher during summer months than in winter. And for the first time in a decade, the United States is experiencing a sustained increase in electricity consumption partly driven by a rapid construction of powerful power centers, more electric vehicles, more electrical devices and more air conditioning to stay in the war in the warmer summers.

More users for the same amount of electricity means higher prices. The Trump administration of key incentives for renewable energies and the slowdown in approvals for new projects are likely to slow down the new generation rate online.

And the process of bridging the demand for electricity becomes a bottleneck, including a larger share of the global invoice. “If you really look at the cost failures of what increases considerably, it is really the network,” said Charles Hua, founder and executive director of Powerlines. “These are the posts and wires that make up our electrical infrastructure that increases costs in particular.”

According to EIA, just under two thirds of the average electricity price is due to production costs, the rest from transmission and distribution. However, the public energy services now put more than half of their expenses in transmission and distribution until the end of the decade. “It was the case perhaps a decade ago when the generation was most of the investments of public services, and therefore customer bills,” said Hua. “But it has now been reversed where it is really the expenditure of the grid that rises and shows no signs of relief.”

There are several reasons for this. The first is that the existing electrical network is old, and many components such as drivers and switching devices reach the ends of their service life. The replacement of equipment from the 60s to 2025 prices increases operating costs even for the same level of service. But the network must now provide higher levels of service as populations increase and technologies such as intermittent renewable energies and energy storage proliferate.

The current failures caused by extreme weather conditions become more frequent and longer, but the tightening of the grid against disasters such as floods and fires is also expensive. The implementation of an electric line can be added to double or more the price of rope drivers along the utility posts, which is why the electricity companies were slow to bring the change, even in the regions subject to disasters.

While public services pay money into distribution networks, they find it more difficult to build new long -distance transmission lines because they encounter license and regulatory delays. The United States is used to building an average of 2,000 miles of high-voltage transmission per year between 2012 and 2016. The construction rate fell to 700 miles per year between 2017 and 2021, and dropped to only 55 miles in 2023. There were 125 miles of new high-voltage transmission installed in the first half of 2024, but everything for a project. This week, the Ministry of Energy canceled a loan guarantee for the Grain Belt Express, a transmission project that would extend to 800 miles in four states.

There are also shortages of critical parts of the grid such as transformers, while prices on materials such as aluminum and steel push construction expenses.

An underestimated engine of higher prices is the lack of coordination between public services, grid operators and states on how to spend their money. In the jargon of public services, this process is called integrated planning of the distribution system, where everyone with a participation in the energy network develops a full plan of which to buy, where to build it and which should pay – but only a few states like Illinois, Maine and New Hampshire have such a system implemented.

“It is sort of obvious,” said Hua. “Everyone should understand the need to plan in advance, especially if you talk about something that has such high economic implications, but that’s not what we do.”

Thus, while prices are increasing, there is no easy way to get around the fact that the grid is late for many necessary and costly upgrades. For millions of Americans, it means that it will become more expensive to stay cool, loaded and connected.