Why Your Electricity Bill May Be Skyrocketing

Forbes

3 days ago

PHOENIX: The Palo Verde Nuclear generating plant, until recently the nation's largest nuclear power plant, is seen between two Saguaro cactus in Phoenix, Arizona. (Photo by) Getty Images
Over the past month, friends, family, and acquaintances have asked why their electricity bills have skyrocketed. One friend wrote, 'I am curious if you have any thoughts about why electric bills are doubling and, in some cases, tripling? People in my area are in shock. In two months, my bill doubled.'
I live in Phoenix, and we actually have reasonable electric bills because we are served by the Palo Verde Generating Station. Despite the intense heat here, my electric bill never rises above $300 except in July. More on that later.
That's not the case everywhere. From the Midwest to the Southeast, people are seeing bills that are several times higher than that. What's driving these sudden spikes isn't just 'using more power' or 'a hot summer.' The reality is more complex, and it won't be easy to solve.
Here are the five biggest forces reshaping your electric bill.
The surge in artificial intelligence has unleashed a gold rush in data center construction, and it's quickly becoming one of the most powerful forces driving electricity demand. These facilities are energy-intensive, often consuming 30 times more electricity than traditional data centers. A single AI center can draw as much power as 80,000 homes, and by 2030, data centers are projected to require 30 GW of new capacity—the equivalent of 30 nuclear reactors.
To meet this demand, utilities are scrambling to add transmission lines and upgrade grid infrastructure, with those costs inevitably showing up on customer bills. At the same time, utilities that sell power into competitive markets—rather than operating under regulated rate caps—are seeing a windfall. Texas-based NRG Energy, for example, has seen its stock price triple in just two years, as soaring wholesale prices boosted profits.
Natural gas powers about 40% of U.S. electricity generation, and U.S. liquefied natural gas (LNG) exports have risen by nearly a factor of seven in the past seven years to over 13 billion cubic feet per day.
That means when Asian or European buyers bid up LNG cargoes, U.S. households indirectly feel it in their electricity bills. Put simply, you're now competing with the world for the same fuel—and global demand is strong. A year ago, at this time, the spot price of natural gas in the U.S. was about $1.00 per Million Btu cheaper than it is this year. That translates directly into higher electricity bills this year.
July 2025 saw record-breaking temperatures across much of the country, with a 'heat dome' trapping high humidity and driving peak demand to 758,149 MWh in a single hour—a national record. Air conditioning loads surged, and in many regions, utilities had to buy expensive spot-market electricity to meet demand. That cost gets socialized across monthly bills.
The U.S. grid is old and straining under new loads. More than 70% of transmission lines and transformers are over 30 years old. Replacing and upgrading them is both essential and expensive.
Delivery charges—the part of your bill that covers the poles, wires, and transformers needed to move electricity—have climbed sharply in recent years. For households, that means even if fuel costs ease or demand moderates, the higher cost of maintaining and upgrading the grid will likely keep electricity prices from returning to the levels we saw just a few years ago.
Finally, policy isn't keeping up. The repeal of clean energy tax credits under the so-called 'Big Beautiful Bill' slowed renewable deployment. At the same time, permitting bottlenecks have delayed new transmission and generation.
Layer on top of that the electrification push—EVs, heat pumps, electric appliances—and electricity demand is rising faster than utilities can build capacity. The mismatch creates structural upward pressure on rates, regardless of short-term market moves.
While millions of Americans are grappling with sticker shock, there are notable exceptions—regions that enjoy stable or even declining electricity prices, thanks to their unique energy mix.
Phoenix is one of them. As previously noted, despite triple-digit temperatures, my own bill rarely exceeds $300, largely because the Palo Verde Generating Station provides stable, low-cost nuclear power. Nuclear plants offer a huge advantage: their fuel (uranium) isn't tied to volatile global gas markets, and their reactors run around the clock at high capacity factors.
It also doesn't hurt that Arizona has seen a 187% increase in wind and solar power over the past decade, and the state ranks 3rd nationally in installed battery storage capacity.
Other regions also benefit from abundant local resources: Idaho: The lowest average rates in the nation at just 11.9 cents per kWh, thanks to hydroelectric power (which can be impacted by droughts).
Pacific Northwest (WA, OR): Wholesale prices are falling in 2025 due to strong hydropower and growing solar generation.
Texas (ERCOT): Despite surging demand, competitive market dynamics and solar buildout are keeping wholesale prices flat or slightly lower.
By contrast, states heavily reliant on natural gas—California, New Jersey, Ohio—are seeing double-digit rate hikes as LNG exports and peak demand drive up costs.
It's worth pausing on nuclear. Yes, the upfront capital costs are high, but once plants are built, their operating costs are remarkably stable—about 9.3 cents per kWh, compared to 7 cents for gas and 9.5 cents for coal. Nuclear also avoids carbon pricing and doesn't need backup generation like intermittent renewables.
In a grid increasingly stressed by AI demand, climate extremes, and geopolitical risks, nuclear's ability to provide price stability, energy security, and reliability is hard to match.
So, why did your bill suddenly double? It's not just about running your air conditioner a little harder. It's about structural shifts in the energy system: AI data centers reshaping demand
LNG exports reshaping fuel markets
Heat waves stressing supply
Aging infrastructure raising delivery costs
Policy bottlenecks slowing new capacity
At the same time, regions anchored by nuclear or hydro have been shielded from the worst price spikes. That contrast underscores an important truth: the U.S. doesn't face a single energy reality—it faces many, depending on local resources and policy choices.
Unless utilities, regulators, and policymakers find smarter ways to expand capacity and modernize the grid, the broader trend is clear: for many households, higher electricity bills aren't just a fluke—they're the new normal.