Hate paying that expensive monthly energy bill? You’re not alone. Nearly 33% of United States households had to forego basic necessities to pay energy bills, and nearly 25% couldn’t keep their home at a safe temperature because of high bills. Most Americans have been shocked by electricity bills in recent years, especially during record heat waves when air conditioning is a necessity. The culprit is fossil fuels, and the climate change impacts they create. New Energy Innovation research shows volatile natural gas prices, uneconomic coal plants, and the cost of hardening the power grid against extreme weather are primary reasons electricity bills keep rising.
Utility business models that reward large investments even when they’re more expensive for customers aren’t helping. In 2023, it was the most profitable year in the last decade for investor-owned utilities. Fortunately, clean energy’s fast-falling prices can lower bills. States with the highest increases in wind power and solar energy since 2010 have seen customer rates rise slower than inflation because they reduced exposure to fossil fuel costs. Government officials and utility regulators must protect customers from electricity price spikes and ensure households don’t have to choose between groceries and paying their bills. Clean energy can help, along with smart utility reform that prioritizes customers.
Rising bills unfortunately aren’t a new problem. Since 2010, electricity rates have risen nearly 40% for the average U.S. residential customer, while the consumer price index has also risen 40%. However, the average U.S. residential electricity consumer’s bill has only risen 24%, significantly lower than inflation. This difference is largely due to increasing energy efficiency and rooftop solar deployment in individual homes and businesses, as well as fast-falling clean energy prices. Over the past decade, solar energy prices have fallen 90%, wind energy by 70%, and batteries more than 90%.
Volatile natural gas prices are driving dangerous electricity cost increases. Unlike wind and solar, natural gas generation depends on inherently volatile commodities whose price swings on geopolitical conflicts, extreme weather, and boom-and-bust supplies. This volatility impacts every part of the economy – soaring fossil fuel costs caused a third of recent U.S. inflation. Increasing liquefied natural gas exports from the U.S. to international markets could increase consumer gas prices up to 14% per year. Expensive coal-fired power plants also contribute to high electricity bills. Even though coal hit a record-low 15% of total U.S. electricity supply at the end of 2023, it’s still costing consumers billions. RMI reports the average amount owed on remaining coal plants has increased over the years.
The cost of climate change is hiding in plain sight on electricity bills. Power generation costs have remained flat or fallen over time, but that’s more than offset by the cost of wildfires and rising grid infrastructure to deal with extreme weather. Since 2010, the cost of maintaining existing power lines and hardening the grid’s resilience against extreme weather has risen significantly. Wildfires are hitting electricity customers hard, especially in California. States across the Western U.S. suffering from wildfires, extreme drought, and rising temperatures like Colorado, Oregon, and Texas face similar challenges. High electricity costs can be cut through utility business model reform, where utility regulators and government officials can protect consumers from unnecessary costs with smart policy.
Clean energy costs keep falling, and deploying more renewable energy can cut costs, exposure to volatile fossil fuel prices, and fossil fuel emissions that accelerate extreme weather. Americans don’t have to bear the burden of high power prices if utilities and their regulators address the root causes of skyrocketing electricity bills. With the continued growth of clean energy sources like wind and solar, customers can benefit from lower electricity rates and reduced exposure to the volatile costs of fossil fuels. By prioritizing customer rates and implementing smart utility reform, high electricity costs can be mitigated, allowing households to better manage their expenses without sacrificing basic necessities.
