Electric rates are rising mainly because wholesale power and capacity costs went up, utilities are spending more on transmission and distribution, and demand is growing. The U.S. average residential price was 17.30¢ per kWh in 2025, up from 16.48¢ in 2024 and 12.55¢ in 2016, according to the EIA’s Electric Power Monthly (Table 5.3). EIA’s October 2026 outlook expects about 18.2¢ for 2026 and 18.7¢ for 2027.
That national number does not predict your bill. Your state can be rising faster, slower or even falling, and your bill can rise because you used more power, the billing period was longer or a fixed charge changed. Compare two bills line by line before blaming a national trend.
How much electric rates have gone up
Keep three numbers apart: the national average, your state’s average and the rate on your own bill. They answer different questions.
Year | U.S. average residential price | Source |
|---|---|---|
2016 | 12.55¢/kWh | EIA, actual |
2020 | 13.15¢/kWh | EIA, actual |
2024 | 16.48¢/kWh | EIA, actual |
2025 | 17.30¢/kWh | EIA, actual |
2026, January–July | 18.19¢/kWh (17.01¢ a year earlier) | EIA, year to date |
2026 full year | About 18.2¢/kWh | EIA forecast, Oct. 6, 2026 |
2027 full year | About 18.7¢/kWh | EIA forecast, Oct. 6, 2026 |
From 2020 to 2025 the national average rose about 32%. These are averages of what households paid per kWh, including fixed charges, so they are not anyone’s tariff. Forecasts come from the EIA Short-Term Energy Outlook and change with each monthly release.
States moved very differently
Comparing January–July 2026 with the same months of 2025, EIA’s state data show residential prices up 17.8% in Washington, D.C., 15.2% in New Hampshire, 13.6% in Maryland and 13.0% in New York, but down 7.7% in Connecticut (EIA Table 5.6.B). Price levels differ even more: over the same months Hawaii averaged 46.28¢ per kWh, Massachusetts 30.14¢ and North Dakota 12.36¢.
A state example: New Jersey
Most New Jersey households buy power through an annual supply auction. After the February 2025 auction, the Board of Public Utilities projected average residential bill increases of 17.23% to 20.20% from June 1, 2025, depending on the utility, and named PJM capacity-auction prices as the main driver (NJ BPU, Feb. 12, 2025). The 2026 auction was close to flat: average bills moved between −1.8% and +1.6% by utility from June 1, 2026, before bill credits (NJ BPU, Feb. 12, 2026). One big step in one year, then a pause, is typical of how supply costs reach bills.
Why electricity rates are rising
EIA says retail prices reflect the cost to build, finance, operate and maintain power plants and the grid, plus fuel costs, weather and regulation. Read EIA’s price-factor explanation. Right now, these are the pressures with the clearest evidence:
Wholesale and capacity prices
EIA expects wholesale power to average $52 per MWh across its 11 tracked hubs in 2026, 11% more than 2025, and 41% more in the PJM region that serves 13 states and D.C. In PJM states, record capacity-auction prices have also fed into supply rates.
Grid spending
Transmission and distribution upgrades, storm repairs and hardening, and cybersecurity are recovered through approved rates or riders, and they stay in delivery charges for years.
Weather
EIA links 2026’s higher wholesale prices partly to winter storm Fern and a hot July. Extreme heat or cold raises both household use and the cost of meeting peak demand.
Demand growth
EIA forecasts commercial electricity demand, which includes data centers, to grow 2.8% in 2027 and industrial demand 2.7%, while residential use stays about flat.
Wholesale is not your retail rate. In the same outlook, EIA notes that wholesale prices are strongly influenced by natural gas prices, while residential prices also include transmission, distribution and, in some regions, capacity-market costs. A wholesale spike can reach your bill months later through an auction or rate case, or be softened by credits.
Find what changed on your bill
Bill line | What to compare | What it can reveal |
|---|---|---|
Billing days | Current period versus comparison period | A longer cycle can raise the total without a higher daily cost. |
Usage | Total kWh and kWh per day | Weather, occupancy, equipment or behavior change. |
Supply or generation | ¢/kWh, supplier and contract date | Fuel, wholesale market, auction or retail supplier change. |
Delivery | Distribution, transmission and riders | Grid investment, storm costs and approved utility charges. |
Fixed charges | Customer charge and minimum bill | A higher bill even when usage falls. |
Credits and assistance | Expiration, true-up or eligibility | Loss of a discount or one-time credit. |
Worked example: splitting a $37.70 increase
This example uses made-up round numbers to show the method.
- Last July: 30 days, 900 kWh at 17.0¢ plus a $10 fixed charge = $163.00
- This July: 33 days, 1,020 kWh at 18.5¢ plus a $12 fixed charge = $200.70
Of the $37.70 difference:
- $15.30 is billing days. Daily use was 30 kWh last year; three extra days at that pace is 90 kWh × 17.0¢.
- $5.10 is real extra use. The other 30 kWh × 17.0¢. Daily use only rose from 30 to about 30.9 kWh.
- $15.30 is the higher rate. 1,020 kWh × 1.5¢.
- $2.00 is the fixed charge.
The bill rose 23%, but the household’s daily use barely moved. If the meter reading is estimated, the bill may correct later. If daily use did jump without an obvious reason, ask the utility to explain the read and look at the biggest loads: heating, cooling, water heating, pool equipment and EV charging.
What a household can do now
- Use the right comparison. Compare the same month last year in kWh per day, not just the total.
- Check the tariff and your plan. Read the utility’s rate sheet for the effective date, fixed charge, tiers and time-of-use periods. A time-of-use plan can help if you can move laundry, dishwashing and EV charging off-peak, and can cost more if you cannot.
- Read a supplier offer carefully. Where states allow supplier choice, a fixed supply price can limit swings, but the utility still bills delivery charges, and variable offers can rise sharply.
- Challenge errors quickly. Ask for a meter-read explanation and a formal bill review when the numbers do not reconcile.
- Target the largest loads. Air sealing, insulation, HVAC service and replacing an old refrigerator or electric water heater work best when they address measured use.
- Ask about assistance. The Low Income Home Energy Assistance Program (LIHEAP) helps eligible households with energy bills, and the Weatherization Assistance Program, which DOE says saves households $372 or more a year on average, funds efficiency work. Utilities also offer payment plans. Eligibility and funding vary by state.
- Measure affordability. The energy burden calculator shows electricity spending as a share of gross household income and explains how to add other fuels.
Solar can hedge some usage, not every bill charge
Owned solar reduces the electricity you buy, so higher per-kWh rates make each kWh it replaces worth more. It does not remove fixed charges, and exported power is often credited below retail. The value depends on production, the rate you avoid, the export credit, system cost and financing. Higher rates do not make a poor proposal good.
Ask each proposal to show:
- 12 months of usage and the exact tariff used.
- Expected production by month and the share used in the home versus exported.
- Fixed charges that remain after solar.
- Export-credit assumptions and how long current rules are expected to apply.
- Cash and financed costs, including fees and interest.
- A conservative case with no assumed rate escalation.
Use the solar payback method to test those inputs. A projected rate increase is an assumption, not money already saved. To see where prices and crediting rules favor solar, read the best states for solar guide or your state’s solar cost guide, and for the overall decision, are solar panels worth it.
Electric-rate questions
Why is my power bill so high all of a sudden?
Check three things in order: a supply or delivery rate change on the bill, a jump in kWh per day from weather or a failing appliance, and billing mechanics such as extra days or an estimated-read correction. The worked example above shows how to split them.
Why did my bill rise when the rate did not?
Usage, billing days or an estimated-meter correction may have changed. Compare kWh per day and the meter-read status.
What uses the most electricity in a home?
Usually heating and cooling, followed by water heating. Electric resistance heat in winter and air conditioning in summer are usually the largest loads; always-on electronics and old appliances set a steady baseline.
Will electric rates keep going up?
EIA’s October 2026 outlook expects the national average to rise again in 2027, to about 18.7¢ per kWh, but no national forecast determines your utility. For near-term local changes, check your utility’s filed rate case and next supply auction or approved tariff.
Have electricity prices gone up everywhere?
Most places, but unevenly. In January–July 2026, average residential prices rose year over year in 47 states and D.C., but fell in Connecticut (7.7%), Rhode Island (1.1%) and Massachusetts (0.3%). Your state’s trend and your utility’s tariff matter more than the national average.
Does changing suppliers remove delivery charges?
Usually not. The local utility still delivers the electricity and bills regulated delivery charges, but market structures vary by state. Read both the supply contract and the utility tariff.
