If your electricity bill has left you feeling depleted this winter, you are in good company. For years, the cost of electricity has been on a steady upward trajectory. The typical monthly home electricity bill climbed from roughly $121 in 2021 to $156 in 2025, marking a jump of almost 30%. In just the period from last January to October, bills increased by 12.7%.
Prepare for more: expenses are expected to climb even higher. Data from the National Energy Assistance Directors Association (NEADA) indicates the average U.S. household is projected to pay close to $1,000 to heat their home this winter. This surge in costs coincides with a growing number of Americans struggling to pay their utility bills. NEADA calculates that as many as four million households had their utilities disconnected in 2025, which is nearly 500,000 more than in 2024. At the same time, overall federal funding for heating assistance is dropping—from $6.1 billion in 2023 to approximately $4 billion in 2025.
The following are five factors that may explain why your electricity bill is above average.
Inflation
Since the pandemic, the price of electricity has increased—mirroring the trend for almost everything else.
“The price consumers pay for electricity has been rising significantly faster than the general inflation rate in the broader economy, which is notable because general inflation has already been quite high,” states Christopher Knittel, faculty director of the MIT Climate Policy Center.
Higher inflation also drives up the expense of maintaining the national electricity grid. “The cost of any construction or installation project today is greater than it was just five years ago,” notes Kenny Stein, vice president of policy at the Institute for Energy Research.
Aging Infrastructure
A large portion of the nation’s power infrastructure was constructed in the 1960s and 1970s, with approximately 70% of transmission lines now more than 25 years old and nearing the end of their useful life.
The grid requires substantial upgrades nationwide, and the price for these improvements is appearing on your statement. “That is a very costly procedure, necessary for safety, but those expenses must be transferred to consumers through higher electricity rates,” explains Knittel.
Tariffs
Steel and aluminum are essential for many of these upgrades. However, tariffs on these critical materials, first implemented during the initial Trump Administration and continued under President Biden, increase equipment and construction costs. Last year, President Trump boosted the tariff rate from 25% to 50% and broadened it to cover over 400 more product categories.
“Imposing tariffs on aluminum or steel invariably increases electricity costs. Consider that constructing or fixing pylons, building power plants, or any major project requires substantial amounts of aluminum and steel,” says Stein. “Those tariff costs will inevitably be incorporated into the price of electricity.”
Climate Change
Extreme weather, from hurricanes to wildfires, can affect electricity prices. Numerous states are proactively working to update their grids. For instance, a report indicates that in California, heightened wildfire mitigation spending between 2019 and 2024 added about 4 cents per kilowatt hour to yearly rates. Delaying these upgrades can result in expensive repairs following a natural disaster.
An analysis from a Texas electricity company revealed that progressively hotter summers have led to a 400% rise in utility rates since the mid-1970s. The report showed the average American household spent about $784 on electricity during the summer of 2025—a 6% increase over 2024.
Data Centers
Electricity demand in the U.S. has surged and is predicted to continue growing. This is largely attributable to a proliferation of data centers appearing in communities across the nation. Data centers were responsible for 4% of total U.S. electricity consumption in 2024, and their energy needs are anticipated to grow significantly by 2030.
“The undeniable major factor is data centers; they are definitely expanding and using far more power. Therefore, it’s difficult to believe they aren’t contributing to higher prices, at least to some extent,” says Knittel. A September analysis found that regions with new data centers experienced electricity cost increases of up to 267% compared to five years prior.
However, Stein points out that significant developments like a new data center can take time to affect your bill: “Rate hikes are passed on to consumers over a period of years, meaning the increases we are currently seeing stem from investment choices or policy measures implemented two, three, or even five years ago.”
Stein cautions that although electricity rate increases are difficult, they are frequently essential to maintain grid reliability—especially now with rising demand.
“During the 2000s or 2010s, when electricity demand was flat, it was possible to defer certain investments,” he says. “But now that demand is growing, that approach is no longer viable. Some states are in a more precarious position than others due to past underinvestment.”
