(NewsNation) — The cost of electricity is rising more than twice as fast as overall inflation, turning a basic household necessity into a growing financial burden.
In August, electricity prices jumped 6.2% from a year earlier and are now up more than 30% over the past four years, according to the Consumer Price Index.
That rise has hit families hard and presents a political challenge for the administration.
President Donald Trump’s energy chief acknowledged the strain in a recent interview and said rising electric bills are what he worries about most.
Energy Secretary Chris Wright blamed the Biden administration, arguing that “all sorts of crazy projects were under construction,” but experts say the reality is more complicated.
Energy secretary says he worries most about high electricity bills
Aging infrastructure needs replacing, and significant upgrades are required to make the nation’s power grid more reliable. At the same time, electricity demand from AI-driven data centers and advanced manufacturing is rising at a record pace.
“We have ignored our infrastructure for a long, long time, especially in areas that have been hit by storms and extreme weather,” said Ed Hirs, an energy fellow at the University of Houston.
As of early September, at least 102 gas and electric utilities have either raised or proposed higher rates that would go into effect in 2025 or 2026, according to an analysis from the Center for American Progress, a liberal think tank.
Utility companies cited the need to upgrade their aging infrastructure in more than half of the rate increases CAP analyzed. In several states, including Florida and California, utilities are facing damage from extreme weather disasters or wildfires.
Beyond infrastructure, Hirs pointed to other factors driving up costs, especially higher natural gas prices, the single largest fuel source for the American power grid. Those elevated prices are the result of strong export growth that’s outpacing U.S. natural gas production, according to the U.S. Energy Information Administration.
The EIA expects electricity prices to increase faster than inflation through 2026.
Upgrading an aging infrastructure
The entire U.S. electricity grid consists of thousands of miles of high-voltage power lines and millions of miles of low-voltage power lines. That network connects thousands of power plants to hundreds of millions of customers across the country.
But much of the grid is outdated, built in the 1960s and 1970s, and according to the Energy Department, 70% of transmission lines are over 25 years old and approaching the end of their typical lifecycle.
That’s a problem because the demands on the nation’s grid are only going up.
“It’s like a two-way highway that was built decades ago that’s now expected to carry rush-hour traffic to and from a major city every time — every day of the year — more cars, bigger trucks, constant congestion,” Sen. Mike Lee, chairman of the Senate Energy and Natural Resources Committee, said at a July hearing.
“If the road hasn’t changed but everything around it has changed, that’s going to be an issue,” Lee said.
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Utility companies have responded by investing hundreds of billions in capital expenditures in recent years. In 2024, investor-owned electric utilities invested a record $178 billion to make the energy grid “smarter, stronger, cleaner, more dynamic and more secure,” according to the Edison Electric Institute, an industry trade group.
However, those projects could become even more expensive under the Trump administration’s current trade policies, warned Rob Gramlich, president of Grid Strategies, a power sector consulting firm.
“Raising tariffs on aluminum and steel, and imported items like transformers, hurts a lot,” Gramlich said.
Rising transformer costs offer just one example. High demand in recent years has created a supply deficit, forcing utilities to turn to the import market, and today imports account for an estimated 80% of U.S. power transformer supply and 50% of distribution transformer supply, according to Wood Mackenzie, a research and consulting firm.
With the latest tariffs, transformer costs are likely to keep rising and lead times will escalate, the firm noted in an August report.
Rising energy demand from AI data centers
Artificial intelligence is already changing the way we work — and the way employers hire — and it will soon transform the energy sector.
That’s because AI requires enormous computing power, which takes electricity — lots of it.
In 2023, data centers consumed about 4% of total U.S. electricity, but that share could grow to as much as 12% by 2028, according to the Energy Department.
Put another way: the U.S. economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement and chemicals, according to a recent report from the International Energy Agency.
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In February, Apple announced plans to spend $500 billion in the U.S. over the next four years, much of which will go toward the company’s AI infrastructure and data centers.
Trump has also announced the Stargate initiative, a joint venture between OpenAI, Oracle and SoftBank, which intends to invest $500 billion to build new AI infrastructure in the U.S.
The question is what the AI buildout will mean for household power bills.
A recent analysis from Carnegie Mellon University and North Carolina State University concluded that the increase in demand for electricity generation could “lead to dramatically higher electricity bills for consumers” — an 8% increase nationwide by 2030 and as much as 25% in some regional markets.
Trump has vowed to “unleash American energy” by increasing the production of fossil fuels while rolling back renewable energy initiatives, which he has called “THE SCAM OF THE CENTURY.”
“We will not approve wind or farmer destroying Solar,” Trump wrote on Truth Social in August, adding that “The days of stupidity are over in the USA!!!”
The concern is that halting those projects could reduce capacity when the U.S. needs it most. According to the EIA, new solar projects account for more than half of the new generating capacity expected to come online this year. Renewables overall account for about a quarter of U.S. electricity generation.
“If you take new supply options off the table by denying permits, which is what the Department of Interior is doing, you’re really exacerbating a supply shortage,” Gramlich said. “That’s only going to raise prices.”
