Retail Electric Rate Increases Outpace Inflation with Prices Set to Rise Higher
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Regulators approved 64% of the dollar value of revenue increase requests over the past five years, a Lawrence Berkeley National Lab report says.
Dive Brief:
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U.S. electric rates increased 2.6% from 2024 to 2025 after adjusting for inflation, Lawrence Berkeley National Laboratory said this month in a 2026 update to an influential journal article researchers published last year on retail electricity price trends and drivers.
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Since 2019, nominal residential electric rates rose by 33%, commercial rates grew 26% and industrial rates increased by 27%, widening what LNBL described as a persistent gap between residential and C&I pricing. But while residential electricity pricing outpaced overall inflation, it rose more slowly than residential natural gas rates, LNBL said in its report, which was prepared by The Brattle Group.
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While inflation-adjusted national average retail electricity prices are 3% higher now than they were in 2019, they are actually 6% lower than in 2010, and total electric bills as a fraction of income are near all-time lows, LBNL said. Those national averages veil significant price differences between regions.
Dive Insight:
The report found that utility rate hike requests are higher than they have been in decades, reaching $18 billion in 2025. State regulators approved 64% of the dollar value of electric utilities’ revenue increase requests between 2021 and 2025, which “suggest[s] additional near-term price increases absent policy/market actions,” LBNL said.LBNL’s data shows California and a broad set of states in the Northeast and Mid-Atlantic saw the biggest retail electric rate increases over the past seven years.
From 2019 to 2025, retail rates rose more than 6 cents/kWh in California; more than 4 cents/kWh in Maine; and more than 2 cents/kWh in New York, New Jersey, Massachusetts, Maryland, Connecticut and Rhode Island after adjusting for inflation, according to LBNL’s data. Prices declined slightly in California from 2024 to 2025 but continued to increase sharply across much of the Northeast and Mid-Atlantic.
LBNL flagged transmission and distribution system spending, much of it related to wildfire mitigation, as a significant driver of rate inflation in California. Reductions in retail sales magnified price increases for customers there and in New York and New England, LBNL said.
All three regions have seen significant increases in behind-the-meter solar and battery capacity since 2019. California has about 20.5 GW of distributed solar capacity, according to the state public utilities commission — more than 40% of the California Independent System Operator’s anticipated peak load this summer.
In some states, LBNL said retail electric rates rose or fell due to commodity pricing, tax policy or localized factors. For example, Hawai’i ratepayers saw some relief in 2025 from fuel oil supply contracts updated to reflect lower global oil prices, while new federal tax credits for existing nuclear reactors lowered generation costs in North Carolina.
Multiple factors pushed prices higher for Maine ratepayers in 2025, including cost recovery from infrastructure repairs following damaging storms in 2024, net billing compensation for subscribers to the state’s fast-growing community solar program and higher wholesale power costs due to higher natural gas prices, LBNL said.
LBNL also examined electric bill size and burden, or the total share of income households pay toward electricity. Those metrics closely correlate with the prevalence of electric heating, its data show, such that southern states — even those with relatively low electric rates — tend to have higher bill burdens than northern states where most homes use propane, natural gas or fuel oil for heating. But those northern states “have additional energy costs not shown here,” LBNL said.
The analysis also found that the share of income paid toward electric bills has remained near all-time lows since 2019. From 2019 to 2025, bill burdens decreased in 23 states, with the largest declines in Georgia, Tennessee, Iowa, Montana and South Carolina, LBNL said.
But that good news is tempered by the fact that bills have risen as a share of income since 2023, particularly for the 20% of ratepayers at the bottom of the income scale, LBNL said. One-third of households earning less than $50,000 per year pay at least 5% of their income toward electricity, according to the report. Bill burdens have increased in 27 states and Washington, D.C. over the past seven years, with D.C., Pennsylvania, California and Maryland notching the biggest increases.