Summer electric bills set to jump 8.5 percent as data centers, heat collide
Residential electricity bills will be 8.5 percent higher on average this summer than last, NEADA projects, with steeper increases in the South. A combination of natural gas prices, grid rebuilding costs and rising data center demand is pushing rates up at four times the pace of overall inflation.
WASHINGTON — U.S. households should expect their electricity bills to climb sharply this summer, the result of accelerating power-price inflation colliding with what climate forecasters say could be one of the hottest summers on record.
The National Energy Assistance Directors Association projects that residential electricity bills will average 8.5 percent higher this summer than last, with even steeper increases expected in parts of the South. Mark Wolfe, the organization's executive director, said families will need to consume more of an increasingly expensive product to stay cool, an unusually difficult combination for household budgets.
Nationally, the cost of a kilowatt-hour has risen by more than 6 percent over the past year and roughly 39 percent over the past five years, outpacing overall inflation by a wide margin. Forecasters attribute the upward pressure to higher natural gas prices, capital investment in rebuilding aging transmission infrastructure and surging electricity demand from new data centers powering artificial intelligence workloads.
The weather backdrop is amplifying the price effect. Climate scientists believe this summer could match or exceed previous heat records, partly driven by El Niño conditions, which would push cooling demand higher in regions that already face the steepest rate increases.
The squeeze is showing up in household decisions. Robin Westphal, a third-grade math teacher who lives between Houston and Galveston, Texas, said her air-conditioning bills topped $300 a month last year and that she and her husband are trimming grocery and restaurant spending to absorb expected increases. In northwest Arkansas, seminary student Matthew Kolb said he has begun donating plasma twice weekly to help cover roughly $250 a month in electricity costs for his family of four.
Federal assistance has not kept pace. Funding for the Low Income Home Energy Assistance Program, known as LIHEAP, has remained flat for three consecutive years even as electricity prices have risen sharply. State energy assistance offices have reported growing waitlists and earlier exhaustion of seasonal funding.