Why Your US Power Bill Is Skyrocketing
▼ Summary
– Electricity prices are expected to see sustained year-over-year increases, disproportionately impacting low-income households who spend more of their income on power bills.
– Many Americans face trade-offs between paying electricity bills and essential expenses like healthcare and housing, with utilities seeking further rate hikes.
– Broader energy trends, such as household electrification through heat pumps and EVs, could reduce overall energy spending and environmental impact depending on policy decisions.
– The “energy wallet” concept tracks total household energy spending, which includes electricity, natural gas, and gasoline, with gasoline being the largest expense at $2,930 per household in 2024.
– Despite recent electricity price increases, overall US household energy spending has remained relatively stable since 2000 when adjusted for inflation.
Many households across the United States are grappling with a sharp rise in their monthly electricity bills, a trend experts warn could persist for the foreseeable future. According to John Quigley, a senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy, multiple economic and infrastructural pressures are converging to drive up power costs year after year.
These escalating electricity prices place a disproportionate burden on low-income families, who must dedicate a larger percentage of their earnings to keeping the lights on. Even at the start of the year, power disconnections due to missed payments were on the rise. An estimated 80 million Americans now face difficult trade-offs, forced to choose between paying their utility bill and covering essentials like medical care or rent. As utilities seek regulatory approval for additional rate hikes, Quigley observes that for a significant portion of households—including those with low to moderate incomes—the situation has already reached a crisis level.
However, it’s important to view these electricity costs within the broader context of total household energy use. While the monthly power bill is a major concern, it represents just one component of what a household spends on energy. Many families also pay for natural gas to heat their homes and cook their food, not to mention gasoline for their cars.
A significant shift is underway as American homes increasingly embrace electrification. People are replacing traditional gas furnaces with highly efficient heat pumps, swapping gas stoves for modern induction cooktops, and trading in gasoline-powered vehicles for electric models. The Electric Power Research Institute (EPRI), a nonprofit research organization, refers to the total amount households spend on all these energy sources as the “energy wallet,” a useful metric for tracking how spending patterns evolve as consumers switch between different fuels.
In a recent report, EPRI calculated that the average U.S. household’s energy wallet totaled $5,530 for 2024. The single largest expense was gasoline, averaging $2,930 per household, while electricity accounted for $1,850. When adjusted for inflation, overall energy spending has remained surprisingly stable since the year 2000. Prior to 2024, electricity costs themselves had also been relatively flat. Given the volatility often seen in energy markets, the long-term steadiness in total household energy expenditure is perhaps the more remarkable story.
(Source: Wired)