Electricity Bills Set to Keep Climbing Through 2026, Experts Warn Relief Is Not on the Horizon

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A perfect storm of factors—soaring energy demand, massive grid modernization costs, extreme weather, and volatile natural gas prices—is pushing electricity bills higher with no sign of abating before 2026, energy experts and analysts warn. The U.S. Energy Information Administration forecasts the national average residential price to reach 18 cents per kilowatt-hour in 2026, a 37% jump from 2020 levels.

"The cake is baked," said Paul Cicio, Chair of the Electricity Transmission Competition Coalition, referring to costs already locked into the system. "For consumers hoping for relief, the ingredients are already mixed and in the oven."

While energy affordability has long been a crisis for low-income households, it is now hitting the middle class. Data from the National Energy Assistance Directors Association shows household energy arrearages rose 31% between late 2023 and mid-2025, with disconnections for nonpayment potentially reaching 4 million next year.

"What's new is that electricity prices have dramatically outpaced wages," said Joe Daniel of the Rocky Mountain Institute. "Moderate-income families are now feeling the same squeeze the poorest have endured for years."

States are attempting to respond. Recently elected New Jersey Governor Mikie Sherrill moved on her first day to freeze rate increases and push for utility business model reforms. California regulators trimmed allowed utility returns. At least six states introduced legislation last year to curb utility profits.

Yet consumer advocates call these steps "too little, too late," freezing rates at historic highs. The core drivers—spiraling transmission and distribution costs, data center demand, climate hardening, and fuel prices—show no quick fixes.

Transmission investment has surged, with nearly $154 billion spent annually in the last five years. When financing charges and incentives are added, the ultimate cost to consumers approaches $1.8 trillion, Cicio noted.

Meanwhile, demand is skyrocketing. After decades of stagnation, U.S. electricity consumption is projected to grow 3% in 2027, driven by data centers, electrification, and EVs. In PJM, the nation's largest grid operator, data center load accounted for 40% of a recent $16.4 billion capacity auction.

Natural gas prices, a key determinant of power costs, are expected to dip only slightly this year before rising again in 2027, fueled by growing LNG exports and power sector demand.

Some see a glimmer of hope in load growth potentially spreading grid costs over more users. "Done correctly, it has the capability of dramatically impacting rates," Daniel said. But benefits would take years to materialize.

For now, the focus is on assistance programs. Investor-owned utilities allocated about $7 billion last year for bill help, payment plans, and efficiency programs. Yet funding for federal aid like LIHEAP faces uncertainty, even as need explodes.

"There should be no charge for a base amount of electricity for very-low-income families," said Mark Wolfe of NEADA. Without structural change, he warned, the affordability crisis will only deepen.

Reader Reactions

Michael R., Small Business Owner from Ohio: "This is unsustainable. My utility bill is now my second-largest overhead after rent. We're told to electrify everything, but then the power to run it becomes unaffordable. The policy disconnect is staggering."

David Chen, Policy Analyst, D.C.: "The analysis misses a key point: strategic demand-side investments and competitive reforms in transmission building could mitigate these costs. The problem isn't just growth; it's how we manage and pay for it."

Sarah Johnson, Retired Teacher, Florida: "I'm on a fixed income. Every month it's a choice between cooling my home and prescriptions. These aren't statistics—they're human crises. And the quote 'the cake is baked' feels like a slap in the face to those of us already struggling."

Carlos M., Energy Consultant, Texas: "The grid needs massive investment, and that costs money. Yes, bills are going up, but reliability is improving in many regions. The conversation should be about valuing resilience and fairly allocating costs, not just promising lower bills."