US electricity rates rise 2.6% above inflation as utility rate hike requests hit $18 billion
Inflation-adjusted US power prices keep climbing, with regulators approving less than two-thirds of utility requests and more hikes expected.
Utility rate hike requests reached $18 billion in 2025, the highest level in decades, and inflation-adjusted US electricity prices rose 2.6% from 2024 to 2025, according to a Lawrence Berkeley National Laboratory update to its influential retail price study published on July 16, 2026.5
Power is getting more expensive in real terms, not just on nominal bills. Since 2019, nominal rates have climbed steadily, and the new LBNL data, prepared with The Brattle Group, shows the trend accelerating rather than flattening.5
Regulators approved only 64% of the dollar value of electric utilities' revenue increase requests between 2021 and 2025. LBNL said that approval rate "suggest[s] additional near-term price increases absent policy/market actions," meaning the gap between what utilities ask for and what they receive is likely to close through future rate cases.5
Residential electricity pricing outpaced overall inflation, though it rose more slowly than residential natural gas rates over the same period. Gas heat is getting costlier faster than electric heating, but electricity used to run cooling, industrial processes and an expanding fleet of data centres keeps grinding higher.5
The burden falls hardest on low-income households. One-third of households earning less than $50,000 per year pay at least 5% of their income toward electricity, and bills have risen as a share of income since 2023, particularly for the bottom 20% of ratepayers, LBNL said.5
The data centre story complicates the outlook. Alphabet paid $5bn in December 2025 for Intersect Power, a developer of utility-scale solar and battery storage, and PG&E estimates that adding a gigawatt of load could lower bills by up to 2% through spreading fixed costs across a larger customer base.1 But that math only works if new load arrives faster than new grid investment, and the current wave of transmission, generation and reliability spending suggests the opposite.5
California offers a partial counterweight. The state has about 20.5 GW of distributed solar capacity, more than 40% of the California Independent System Operator's anticipated peak load this summer, which helps shave demand and reduce wholesale price spikes.5
The restructuring promise of cheap power has not materialised. Advocates had predicted savings as high as 40% from electricity industry restructuring, while one management consultant concluded that if all utilities employed best practices, they could save about 10%. Real prices fell 17% between 1990 and 2000 as the industry geared up for competition, with fuel costs accounting for 7 percentage points of that decline, but the real price has increased by less than 0.1% per year since.3
Japan is charting a different course, with the economy ministry planning to replace up to 14 nuclear reactors by 2050, two to five of them to be rebuilt by the 2040s. If all 14 are built, they would add 16 GW to generation capacity, a hedge against the fuel-price volatility pushing up rates elsewhere.2 The government is also adjusting the assumed base capital cost for new generation from 5% to 5.5%, with a range of 4.5% to 6.5%, reflecting higher interest rates and feeding directly into how much utilities can charge ratepayers.4
The Philippines recorded the highest average residential electricity rate among ASEAN countries in June 2026, driven by supply constraints in the Visayas and increased reliance on more expensive generation.6
The near-term question is whether the 64% approval rate rises or falls. Utilities argue they need more revenue to harden grids against extreme weather, connect data centres and replace ageing fossil plants. Regulators face voters who see bills climbing faster than wages. LBNL's data suggests the pressure runs one direction: utilities asked for more, got most but not all, and will come back for the rest. The next round of rate case filings this autumn will show whether regulators are tightening or capitulating.5