Why electricity prices are surging for U.S. households
Kilito Chan | Moment | Getty Images
Electricity prices are rising quickly for U.S. households, even as overall inflation has cooled.
Electricity prices rose 4.5% in the past year, according to the consumer price index for May 2025 — nearly double the inflation rate for all goods and services.
The U.S. Energy Information Administration estimated in May that retail electricity prices would outpace inflation through 2026. Prices have already risen faster than the broad inflation rate since 2022, it said.
“It’s a pretty simple story: It’s a story of supply and demand,” said David Hill, executive vice president of energy at the Bipartisan Policy Center and former general counsel at the U.S. Energy Department.
There are many contributing factors, economists and energy experts said.
At a high level, the growth in electricity demand and deactivation of power-generating facilities are outstripping the pace at which new electricity generation is being added to the electric grid, Hill said.
Prices are regional
U.S. consumers spent an average of about $1,760 on electricity in 2023, according to the EIA, which cited federal data from the Bureau of Labor Statistics.
Of course, cost can vary widely based on where consumers live and their electricity consumption. The average U.S. household paid about 17 cents per kilowatt-hour of electricity in March 2025 — but ranged from a low of about 11 cents per kWh in North Dakota to about 41 cents per kWh in Hawaii, according to EIA data.
Households in certain geographies will see their electric bills rise faster than those in others, experts said.
Residential electricity prices in the Pacific, Middle Atlantic and New England regions — areas where consumers already pay much more per kilowatt-hour for electricity — could increase more than the national average, according to the EIA.
“Electricity prices are regionally determined, not globally determined like oil prices,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.
The EIA expects average retail electricity prices to increase 13% from 2022 through 2025.
That means the average household’s annual electricity bill could rise about $219 in 2025 relative to 2022, to about $1,902 from $1,683, according to a CNBC analysis of federal data. That assumes their usage is unchanged.
But prices for Pacific area households will rise 26% over that period, to more than 21 cents per kilowatt-hour, EIA estimates. Meanwhile, households in the West North Central region will see prices increase 8% in that period, to almost 11 cents per kWh.
However, certain electricity trends are happening nationwide, not just regionally, experts said.
Data centers are ‘energy hungry’
The QTS data center complex under development in Fayetteville, Georgia, on Oct. 17, 2024.
Elijah Nouvelage | Bloomberg | Getty Images
Electricity demand growth was “minimal” in recent decades due to increases in energy efficiency, according to Jennifer Curran, senior vice president of planning and operations at Midcontinent Independent System Operator, who testified at a House energy hearing in March. (MISO, a regional electric-grid operator, serves 45 million people across 15 states.)
Meanwhile, U.S. “electrification” swelled via use of electronic devices, smart-home products and electric vehicles, Curran said.
Now, demand is poised to surge in coming years, and data centers are a major contributor, experts said.
Data centers are vast warehouses of computer servers and other IT equipment that power cloud computing, artificial intelligence and other tech applications.
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Data center electricity use tripled to 176 Terawatt-hours in the decade through 2023, according to the U.S. Energy Department. Use is projected to double or triple by 2028, the agency said.
Data centers are expected to consume up to 12% of total U.S. electricity by 2028, up from 4.4% in 2023, the Energy Department said.
They’re “energy hungry,” Curran said. Demand growth has been “unexpected” and largely due to support for artificial intelligence, she said.
The U.S. economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminum, steel, cement and chemicals, according to the International Energy Agency.
Continued electrification among businesses and households is expected to raise electricity demand, too, experts said.
The U.S. has moved away from fossil fuels like coal, oil and natural gas to reduce planet-warming greenhouse-gas emissions.
For example, more households may use electric vehicles rather than gasoline-powered cars or electric heat pumps versus a gas furnace — which are more efficient technologies but raise overall demand on the electric grid, experts said.
Population growth and cryptocurrency mining, another power-intensive activity, are also contributors, said BPC’s Hill.
‘All about infrastructure’
Thianchai Sitthikongsak | Moment | Getty Images
As electricity demand is rising, the U.S. is also having problems relative to transmission and distribution of power, said Seydl of J.P. Morgan.
Rising electricity prices are “all about infrastructure at this point,” he said. “The grid is aged.”
For example, transmission line growth is “stuck in a rut” and “way below” Energy Department targets for 2030 and 2035, Michael Cembalest, chairman of market and investment Strategy for J.P. Morgan Asset & Wealth Management, wrote in a March energy report.
Shortages of transformer equipment — which step voltages up and down across the U.S. grid — pose another obstacle, Cembalest wrote. Delivery times are about two to three years, up from about four to six weeks in 2019, he wrote.
“Half of all US transformers are near the end of their useful lives and will need replacing, along with replacements in areas affected by hurricanes, floods and wildfires,” Cembalest wrote.
Transformers and other transmission equipment have experienced the second highest inflation rate among all wholesale goods in the US since 2018, he wrote.
Meanwhile, certain facilities like old fossil-fuel powered plants have been decommissioned and new energy capacity to replace it has been relatively slow to come online, said BPC’s Hill. There has also been inflation in prices for equipment and labor, so it costs more to build facilities, he said.
The electric restomod experts at Lunaz have turned their talents towards the classic Rolls-Royce Phantom V limousine – and the result is exactly the kind of smooth, quiet, and luxurious ride RR’s founders would have built.
Rolls-Royce’ founders dedicated their engineering talents to developing cars that were smooth, quiet, and adequately powerful – and they spared no expense. The company Charles Rolls and Henry Royce founded would eventually go on to develop some of the most powerful and celebrated combustion engines of the twentieth century … but the car they wanted to build? It was electric.
“The electric car is perfectly noiseless and clean,” Charles Rolls told The Motor-Car Journal, all the way back in April of 1900. (!) “There is no smell or vibration, and they should become very useful when fixed charging stations can be arranged. But for now, I do not anticipate that they will be very serviceable – at least for many years to come.”
Well, 125 years seems like “many” to – and the talented craftspeople and engineers at Lunaz seem to agree. Meet the Lunaz Rolls-Royce Phantom V limousine.
It’s glorious
Lunaz says it’s true to Rolls’ vision “down to the smallest, most indulgent detail.” To that end, the company re-trims the modern heated and ventilated seats in fine leathers, hand-cut and stitched to the buyers’ specifications. In the rear, the center console can be ordered with a built-in cigar humidor, a cocktail bar, or some other custom-spec, lockable storage lined in suede and polished walnut (translation: guns and drugs, probably).
When reimagining the Rolls-Royce Phantom V, (we) started by understanding the essence of its original design. Every component and dynamic was scrutinized to identify where thoughtful innovation could truly elevate the experience. The result is a harmonious blend of modern advancements and original mastery, unlocking new levels of performance, reliability and refinement while honoring Rolls-Royce’ classic soul.
Like the classic Bentley S2 Continental the company revealed in 2023, the big electric Roller is equipped with an 80 kWh battery pack sending electrons to a proprietary Lunaz drivetrain featuring 400 hp worth of electric motors delivering a silky-smooth 530 lb-ft of torque, good for a 0-100 km/h (62 mph) swoosh in about seven seconds. Of course, why you’d ever ask your driver to perform such plebian stunts is simply beyond me.
The transformation and restoration took more than 5,500 man-hours to complete, and involve more than 11,000 new or reconditioned components at a cost of more than £1 million (about $1.35 million US). If you place your order today, you should get yours in 18-24 months.
Lunaz Rolls-Royce gallery
SOURCE | IMAGES: Lunaz.
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Fortescue has taken the wraps off a prototype of its proposed “Infinity Train” electric locomotive, making the 1,100 km (about 685 miles) trip from Perth to the Pilbara and marking a major milestone in the decarbonization of the company’s heavy haul operations.
Co-developed with the locomotive experts at Downer Group, Fortescue revealed its concept for a battery electric “Infinity Train” back in March of 2022. At the time, the company promised a “world’s first” iron ore train capable of fully charging its batteries through regenerative braking. The two companies claimed the clever technology would create a self-sustaining, zero-emission rail system powered entirely by the force of gravity during the train’s loaded downhill travels.
This week, the concept went from the drawing board to the real world, completing an 1,100 km trip across Australia and proving itself to be up to the task of handling the grueling demands of Fortescue’s massive mining operations.
“We’re thrilled to see our battery electric locomotive prototype arrive in the Pilbara,” said Ellie Coates, CEO of Fortescue Zero. She added that the achievement, using zero fossil fuels, “represent(s) a major step in Fortescue’s journey to Real Zero.”
The Fortescue Infinity Train uses the energy produced by slowing the loaded train on downhill sections of the company’s 385 mile private, heavy-haul rail network to recharge its battery systems. That energy is enough to bring the unloaded train back to the mine, eliminating the need for external charging infrastructure or additional renewable energy sources, making the train almost entirely self-sufficient.
Fortescue says the deployment of the Infinity Train concept at its mines will eliminate more than 82 million liters of diesel fuel consumption (about 21 million gallons, which ChatGPT tells me amounts to about 235,200 tons of CO₂ emissions).
That change alone would eliminate about 11% of Scope 1 emissions annually for Fortescue all on its own, putting it well on its way to its stated goal of achieving “Real Zero” emissions-free operations.
Electrek’s Take
Using gravity to charge up heavily-laden mining vehicles on downhill runs is an idea that’s been put into practice for years, with great success wherever the topography allows (since 2017, at least). Combining that clever use of gravity, traction braking, and battery storage for use on a rail system like this just seems smart, and it makes me think we’re just scratching the surface of all the clever ways electrification and battery storage will eventually get put to use.
I wonder what would happen if you threw some battery electric rail cars into the mix, as well!? You guys are smart, head down to the comments and let me know (and, while you’re there, help me check ChatGPT’s math on those carbon emissions).
SOURCE | IMAGES: Fortescue, via LinkedIn.
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A new study by the Pembina Institute shows that a third of the commercial trucks and vans on Toronto’s roads are ready to electrify today – while nearly half could be electrified by 2030.
A new analysis by the Pembina Institute titled Electrifying Fleet Trucks: A case study estimating potential in the GTHA finds that as many as a third of trucks in the Greater Toronto and Hamilton Area (GTHA) could go electric today, rising to more than half by early 2030s — insulating businesses from rising fuel costs and reducing harmful air pollution that drives up health care costs. What’s more, the report found that battery range and charging access are less of a barrier than expected.
“Real-world travel data from Canadian trucks, collected over summer and winter months, shows that electrification is possible today,” says Chandan Bhardwaj, Senior Analyst at the Pembina Institute. “In fact, with a staggered approach, the GTHA — home to over half the province’s vehicle stock — could reach 50% sales for lighter trucks by 2030, helping offset lower adoption rates for heavier trucks.”
So, what’s holding back electric vehicle adoption? According to the study’s authors, it’s a matter of public policy. But without the right policies in place, the study argues, businesses face unnecessary hurdles in making the switch.
“Our analysis shows that Ontario has a clear path to accelerating the transition to zero-emission trucks — unlocking economic opportunities, improving public health and positioning itself as a leader in clean transportation,” says Adam Thorn, Transportation Director at the Pembina Institute. “With the right policies in place, businesses can reap the benefits of lower costs while the province strengthens its manufacturing sector and energy security.”
We already knew this
If all of this sounds a bit familiar, it’s probably because you’ve heard this before. The California Air Resource Board (CARB) came to very similar conclusions in their report, titled, Determining energy use patterns and battery charging infrastructure for zero-emission heavy-duty vehicles and off-road equipment.
CARB staff believe that several heavy-duty ZE vocational trucks are ready to be electrified because of their low daily mileage demands (<100 mi). Long-haul Class 8 trucks continue to be a challenge to fully electrify because of the long operation range (300+ mi) and on-demand charging need.
In fact, the California study came to almost the exact conclusion that the Toronto study did when examining the heavy-duty Class 7 and 8 EV market. Which is to say: it’s not a question of capability, but a question of availability.
“The availability of on-road heavy-duty ZE trucks has increased in recent years,” reads the report. “But their numbers remain significantly lower than their diesel and natural gas counterparts. As of 2022, an estimated 2,300 on-road ZE medium- and heavy-duty vehicles are operating in California, with the vast majority located in South Coast Air Bassin (Figure 1). On-road heavy-duty ZE transit buses account for the majority of all on-road heavy-duty ZEVs in California, but, as of 2023, sales of ZE heavy-duty trucks and medium-duty step vans have outpaced other vocations, indicating that these vehicles will be more prevalent in fleets in the near future.”
That’s proven to be true, with sales of Class 2 vans and other medium-duty EVs rapidly outpacing the general public’s adoption of EVs as new options became available in 2024, with no signs of slowing down in 2025 (at least, where the right policies are in place).
Here are some of the key takeaways from the Pembina Institute study from the Toronto truck market. Obviously, it won’t directly translate to every city’s truck fleet – but take a look at Toronto’s demographics and some of the key variables involved (truck size, average loads, miles driven, etc.) and you might be surprised at how similar your city and your fleet might be.
- Businesses can save up to 40% of fuel and maintenance costs by switching to electric trucks.
- Electric trucks eliminate tailpipe emissions, cutting harmful air pollution and improve public health.
- Traffic related air pollution in the Greater Toronto and Hamilton Area leads to 700 premature deaths and 2,800 hospitalizations every year, costing health care system $4.6 billion annually.
- Ontario’s Driving Prosperity plan highlights the need for increased electrification, while the City of Toronto is targeting 30% of all registered vehicles to be electric by 2030.
- Governments worldwide are embracing electrification, setting ambitious sales targets for zero-emission vans and trucks.
- By 2030, jurisdictions like Europe, China, California, British Columbia and Quebec aim for about 35% of new truck sales to be zero-emission, ramping up to nearly 100% by 2040.
SOURCES: CARB, Pembina Institute, via Electric Autonomy; featured image by PACCAR.
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