Electricity bills are up, and data centers are getting the blame. But in the data so far, the states with the fastest-growing power use have mostly seen rates rise slower than elsewhere, not faster. Rising demand is supposed to push rates up, not down, but there are good reasons to think rising demand has held electric rates down in some areas. The question worth asking is whether we can count on that to last.
A lot of attention has been paid to the role of growing electricity use by data centers; however, most commentary has proceeded without much in the way of thoughtful analysis. A study on drivers of state-level trends in U.S. retail electricity prices from the Lawrence Berkeley National Lab begins to fill the gap.
But 2025 is different. Utilities sought $29 billion in rate hikes so far this year—nearly double the 2024 pace—and average prices rose at about twice the rate of inflation in the first half of the year. Inflation accounts for a big part of the story, but not all of it.
A revolution in the West's electric power grid is on the horizon, offering consumers potential reliability and economic benefits. However, those benefits will only be realized if we prevent special interests from hijacking the process.
Help us promote free market solutions for climate change.
Thank you for signing up