As rising energy prices become a potent political issue, one Vanderbilt University expert is pitching a set of regulations that he claims would reduce the average household’s monthly electric bill by almost a third, without requiring any government subsidies.
The plan would work by squeezing energy companies’ profits and charging manufacturers more for their electricity while households pay less.
Brian Shearer said his plan would bring the average household’s bill below $100 a month, from a current average of $142.
“The amount of people who are focused on affordability, and in particular energy bill prices, is only increasing,” said Shearer, who previously worked for the Consumer Financial Protection Bureau. “I think we’re seeing policymakers from across the political spectrum paying a lot more attention than we have in years past.”
Because utilities are publicly regulated, political leaders have more direct influence on energy prices than on costs such as groceries or housing. Every electric company must propose its rates to its state regulator for approval.
Some experts who read Shearer’s proposal in advance of its publication Thursday questioned whether it’s fair or feasible to make manufacturers pay much higher utility rates, and the energy industry objected to the idea of government restricting its profits.
Drew Maloney, CEO of the Edison Electric Institute, which represents all U.S. investor-owned electric companies, said restricting companies’ returns by law would “ultimately harm consumers.” He said in an email, “The U.S. electric grid is one of the most sophisticated systems ever built, serving as the backbone of our economy and national security. Continued investment is essential to keep energy affordable and reliable for customers and to make the grid stronger, smarter, and more secure.”
Energy costs rose 40 percent nationwide from February 2020 to January 2026, due to factors including rising household demand, enormous new power demands from the data centers that power artificial intelligence, investments in infrastructure and rising profits for some utility companies. The conflict in Iran could severely affectthe world’s natural gas market, leading to more price spikes ahead.
The burden varies across states — costs rose 5 percent nationwide in 2025 but more than 10 percent in Washington state, Illinois and Maine, and 23 percent in D.C.
In New Jersey, which saw the nation’s largest spike in energy prices last year, Gov. Mikie Sherrill (D) made energy prices a top issue of her election campaign and ordered a freeze on electric bills. In some states, the number of power shutoffs for customers who can’t pay their bills rose sharply.
In his white paper, Shearer proposes a five-part plan to reduce electric costs by 30 percent, including a model bill that any state could adopt. Each proposal could also be enacted at the federal level.
1. Charge the same rates for households and businesses
Utilities currently charge different rates for different types of customers, reflecting the varying levels of difficulty in delivering their energy to them. Industrial customers tend to pay the lowest rate, and households often pay the highest rates, with the commercial rate in between. (Energy-hungry data centers generally fall into the middle category.)
Shearer proposes that either federal or state law could require a flat rate for all types of customers (though utilities could still vary their rates for other reasons, such as the time of day). He calculates that would reduce the average household’s bill by $366 a year, while raising rates for manufacturers by more than 50 percent. Manufacturers’ overall cost of production would go up about 1 percent, he said.
Some experts questioned the practicality or the fairness of that idea. “The lower rates for industrial customers are based on a lower cost of service. It just costs more to delivery electricity to residential customers,” said Michael O’Boyle, senior director of policy and strategy for the think tank Energy Innovation.
2. Cap utilities’ profits
While some Americans are served by publicly owned utility companies, the large majority get their power from for-profit companies.
When those companies ask state regulators to approve their rates, they request a rate that will let them recoup their costs plus a certain percentage return to their investors. Those returns have crept higher: Shearer said the average was 9.38 percent in 2021, 9.54 in 2022, 9.6 in 2023 and 9.7 in 2024.
Shearer proposes restricting returns, by law, to no more than 7 percent, or 2 percent more than the interest rate on Treasury bonds, whichever is higher. That’s higher than legislation that has been introduced in California, New York and Rhode Island to cap returns at just 4 percent.
“Every time a rate is approved … each commission never wants to be the lowball. They always want to approve a rate that’s kind of in the same ballpark as everybody else. There’s a natural inflationary effect,” Shearer said. “Slowly, over time, it’s just increased.”
Maloney, of the electricity trade group, objected by email: “Reducing investment in the electric grid doesn’t lower costs for customers — it ultimately raises them. When electric utilities are unable to invest adequately in infrastructure, reliability suffers and the system becomes more expensive to operate over time. A regulatory framework that attracts long-term investment is essential to ensuring the grid remains reliable and affordable for customers.”
3. End a federal bonus for electric companies
In the 1990s, federal regulators allowed utilities that joined regional transmission organizations an extra half percentage point in returns. But Shearer argues that incentive to join competitive regional markets is no longer relevant, since companies long ago decided whether to participate. Removing that bonus would knock utilities’ profits down further.
4. Require rebates for ratepayers
Sometimes electric companies end up making more money than they predicted when asking regulators to approve their rates. When that happens, some companies send rebates to customers, rather than keep the profits. Shearer proposes that all states could require those rebates.
From 2016 to 2021, he noted, the majority of electric companies’ earnings exceeded their annual predictions.
5. Prevent companies from charging corporate jet costs to ratepayers
Shearer proposes a ban on companies including certain expenses when they tally up their costs for regulators, including corporate jets, advertising, lobbying and political or charitable contributions. At least seven states have already banned many of these expenses.
Some experts have called for different systemic changes to the way utilities are compensated to try to bring down utilities’ overall spending. O’Boyle said of Shearer’s proposals: “These are all about how to divide the pie of utility costs across customers and shareholders. None of them really address the problem of the size of the pie.”
Spending by utility companies has been rising, as companies replace aging infrastructure and confront climate change hazards. “Utilities make money when they spend money …. They generally like to spend money on new infrastructure,” said Charles Hua, founder of the group PowerLines. “They earn a return on capital expenditures. So they are fundamentally incentivized to spend capital … and not to prioritize efficiency.”
Shearer’s ideas also don’t take on the massive new power demands from data centers. Some states are working on laws to make tech companies pay for the infrastructure needed to power their data centers. President Donald Trump last week announced a voluntary pledge accepted by some artificial-intelligence companies to cover the energy costs of their data centers.
The post An expert says his plan would slash energy bills by 30 percent appeared first on Washington Post.
