Electricity bills are set to climb across the United States, with households bracing for higher costs this summer.
Analysts say three forces are converging: a spike in natural-gas prices, surging load from artificial intelligence (AI)-driven data centers that is triggering multi-billion-dollar capacity charges, and an aging, congested grid that is passing ever-rising transmission costs on to consumers.
Natural Gas Prices
The Energy Information Administration (EIA) projects a roughly 4 percent rise in average electric bills in June, July, and August compared with last year, which it attributed to a spike in the cost of natural gas—the top source of utility-scale electricity generation in 2023.
Another forecast from the EIA earlier this week, which included September, suggested an increase of just under 3 percent. That month generally sees cooler weather, lighter air conditioning use, and marginally lower fuel-driven rates. However, data from the National Energy Assistance Directors Association (NEADA) and the Center for Energy Poverty and Climate (CEPC) painted a grimmer picture.
According to this report, from June through September, the average U.S. household is expected to pay $784 for electricity over this four-month period, a 6.2 percent increase from $737 last year. When adjusted for inflation, the rise amounts to approximately 4.3 percent compared to last year’s prices, NEADA and CEPC said, who also noted this would represent a 12-year high for electricity prices.
“We predict that prices will be this high for two reasons: first, the cost of electricity is rising faster than [the] average rate of inflation, and second, temperatures are continuing to increase, reflecting the continuing impact of climate change and requiring additional energy to cool indoor spaces,” the NEADA/CEPC report said.
Mark Wolfe, executive director of NEADA, told Newsweek that”while 4.3 percent doesn’t seem like a large increase, this comes on top of bills that have been steadily increasing.”
He added: “Not only that, but families need to use more electricity to cool their homes each year as summer temperatures keep increasing.”
The Rise of Data Centers
Power demand is also set to grow alongside the proliferation of data centers—centralized facilities housing equipment used to store, process, and distribute data.
In the PJM Interconnection—the nation’s largest electricity market, serving 13 states and Washington, D.C.—an additional $9.3 billion in costs tied to future capacity needs will begin appearing in customer bills this month, The Wall Street Journal reported.
A report by Monitoring Analytics, PJM’s independent market monitor, cited “unprecedented” demand, both current and future, from data centers as the primary driver.
“The report of PJM’s Independent Market Monitor, Monitoring Analytics, does affirm what PJM has been saying, which is that supply/demand conditions drove higher prices in the 2025/2026 capacity auction,” PJM told Newsweek.
According to the Federal Energy Regulatory Commission (FERC), capacity-market auctions are a reliability backstop: generators compete to promise enough future capacity, and the competition keeps costs down for consumers.
“Last summer, PJM ran its most recent capacity auction, which saw prices increase significantly from the prior auction. The result of the increase was primarily based on a continued trajectory of supply decreasing and demand increasing on the system. Higher capacity prices help to send a clear signal that generation investment is needed,” PJM told Newsweek.
PJM says that demand is increasing primarily due to the power requirements of AI and data centers, but also from electrification—replacing technologies or processes that use fossil fuels with electrically-powered equivalents—and a resurgence in U.S. manufacturing.
“Data centers and AI will certainly drive demand up and that could lead to higher electricity prices as more costly generation needs to be brought online to meet demand,” Gilbert Metcalf, professor of economics at Tufts University, told Newsweek.
He added: “Much depends on how state regulators approve new massive demand loads to connect to the grid. They could, for example, mandate that data centers curtail demand during peak periods or pay for improved infrastructure to ease congestion. Big data centers will resist this, but new, large demand loads added to the grid do bring increased costs that, unless regulators intervene, will be spread to all users.”
America’s Aging Grid System
Robert Pindyck, a finance and economics professor at the MIT Sloan School of Management, told Newsweek there was “just one reason” behind rising electricity bills, “and that’s the grid.”
“We have a very antiquated, inefficient grid here in the United States, and the result is that if there’s any increase in demand—even if the electricity can be generated cheaply—it’s very hard to move it from A to B,” he said.
The numbers back up Pindyck’s warning. The 2025 American Society of Civil Engineers “Report Card” gives the nation’s power infrastructure a D+ and calculates a $578 billion investment gap in transmission and distribution through 2033—even after factoring in the $73 billion already set aside for grid upgrades under the 2021 infrastructure law.
Modernizing the grid to meet demand would be “very hard to do,” according to Pindyck.
This is in part because different states have different rules. Texas, for example, has its own grid that isn’t connected to the rest of the country. It operates like a separate country in that sense, and it’s very inefficient, Pindyck added.
Even outside of Texas, building new power lines is extremely hard as there are strict rules about what can be built and where, and people generally don’t want new lines in their area. As a result, nothing gets built, Pindyck said.
On Thursday, during an appearance on Fox Business’ Mornings with Maria, Secretary of Energy Chris Wright warned that the grid was reaching its limit.
“We need to make changes rapidly. We need to see new capacity built, smarter regulation, we need to use our grid wiser. There’s so many things we need to do to improve it. We can’t do it all overnight,” Wright said.
Wolfe, meanwhile, told CBS MoneyWatch in May that taking efforts to modernize your home can lead to cost savings for households as they try and keep cool during the warmer months. For instance, installing insulation can help manage and reduce energy expenses.
“Families should start preparing for long-term extreme weather and think about the energy efficiency of their cooling systems,” Wolfe said.
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