Shocked by your electric bill? 3 reasons costs are rising

Electric prices have been on a roller coaster in the last few years, and at the moment they’re going up… up… up. 

Nationally, residential electricity prices rose 10.5% between January and August of this year, according to the National Energy Assistance Directors Association (NEADA). That’s more than three times the annual rate of overall inflation. Since 2019, residential electricity prices have risen about 35.7%.

But the national average hides a lot of regional variation. While a handful of states actually saw electricity prices drop in the first nine months of this year, nine states saw an increase of more than 20% — topped by Missouri at 37.4% and North Dakota at 30.3%.

The chance that prices are going to level out soon is slim, even as energy affordability becomes a hot-button political issue. 

U.S. electricity providers are for-profit companies that are tightly regulated by state public utility commissions. In the first nine months of this year, utilities proposed and received authorization for $34 billion in rate increases — more than double the $16 billion during the same period last year, according to Powerlines, a nonprofit that focuses on regulatory and other issues affecting the U.S. power grid.

In an interview with NerdWallet, Charles Hua, founder and executive director of Powerlines, listed some of the primary causes of electricity inflation. 

“Our poles and wires are aging. It costs a lot of money to just replace that infrastructure,” Hua says. “And some of that is just because the poles and wires in your backyard are just reaching the end of their useful life.”

At the same time, energy demand is rising thanks to the AI boom and other factors. Hua notes that there are proven ways to make our current energy grid more efficient without going on a building spree — but that’s not how utilities are incentivized. 

“The thing to know about utilities is that they earn a profit only on capital expenditures and not on operational expenditures,” Hua says. “So they have a structural incentive to build a bunch of new power plants and to build a bunch of new infrastructure.”

“The second big factor is extreme weather events — storms, wildfires, winter cold stretches, hurricanes — that have battered our energy and grid infrastructure in many ways,” Hua says. 

And it’s not just a like-for-like replacement of damaged infrastructure, he adds, but upgrading it to make it more resilient as such events grow more common. Extreme weather events have also driven up insurance and other costs for utility companies.

Natural gas is the biggest single source of electricity in the U.S., accounting for about 43% of power generated in 2023. Gas prices skyrocketed after Russia invaded Ukraine, and while they fell back after that spike, they have been rising again in recent months. Hua notes that in many states, utilities can pass those increases directly onto consumers. 

Utilities are monopolies, so while it’s not possible to shop around for electricity providers, homeowners can take measures to make their own homes more energy-efficient.

For those struggling financially, there are programs to help low-income consumers pay their utility bills. You can check with your energy provider for local programs, and search Google for “energy assistance” in your state.

- Rick VanderKnyff

New year’s optimism is a mood lifter: Nearly two-thirds of Americans (63%) say 2026 will be financially better for them than 2025, according to NerdWallet’s consumer outlook survey. 

The survey, focused on consumers’ financial outlook for 2026, takes a look at the money vibes going into the new year. And the vibes are… a bit all over the place. 

While Americans are overwhelmingly confident about their ability to financially withstand a recession (62%), tariff-related price increases (67%) or high inflation (63%) should they occur in 2026, some are feeling anxious (32%) and/or stressed (30%) about their financial situation going into the new year. And more than half of Americans (51%) think consumer prices for goods and services will get worse in 2026.

Despite our best efforts, we can’t predict what money setbacks the new year may bring. But we do know that there’s much to be gained from getting your financial house in order to make those potential stumbling blocks easier to weather. Here’s what a Nerd would consider:

- Erin El Issa

This week on Smart Money, senior news writer Anna Helhoski discusses the year in housing with mortgage writers Holden Lewis and Kate Wood. They review how ultra-low pandemic mortgage rates helped fuel today’s affordability crisis, why rising climate risks are driving up home insurance and escrow costs for owners, and how shifting trends like older first-time buyers and fewer buyers with kids are changing what “normal” looks like in the housing market.

Overspend on Black Friday? Personal finance writer Kate Ashford shares tips for how to recover from Thanksgiving weekend debt regrets.

Use credit cards strategically. When used intentionally, credit cards can help you build credit, earn rewards and even track spending. Learn why nearly every purchase should be on a credit card.

Learn how to tackle credit card debt. There are at least 10 proven methods to try, including the debt snowball and the debt avalanche. NerdWallet’s personal finance writers explain the strategies.

- Courtney Neidel

Debt-free December: For 25 days straight, NerdWallet is giving away $100,000 cash to help you pay down your debt or use however you choose. 25 days. 25 prizes. 25 chances to win $100,000. Learn more.

In its latest quest to get you things you don’t really need even faster, Amazon announced that it’s testing 30-minute (or less) delivery times in parts of Seattle and Philadelphia. 

Not all inventory on Amazon is available for this “ultra-fast” delivery service, but customers in eligible areas can browse for groceries, electronics, over-the-counter medications and seasonal items that can be delivered before you’re even halfway through the season five premiere of “Stranger Things.” 

Fees start at $3.99 for Prime members and $13.99 for non-members, with a $1.99 fee added to orders under $15. Delayed gratification sold separately.

- Kate Ashford

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