Electricity Prices Are Surging. How the Political Fallout Could Hit Companies, Too.

Residential electricity rates have been climbing higher. (Brandon Bell/Getty Images)

Rising electricity prices are a growing problem for Americans, and a political problem for the Trump administration. Residential electricity rates have risen about 30% since 2021—and 5.5% in the past year alone, twice as fast as overall inflation in the same span. The Energy Information Administration projects that residential rates will rise by roughly 6% in 2026.

The fallout could be a problem for almost every player in the electricity ecosystem—from renewable energy developers like NextEra Energy, to power plant owners like Vistra , utilities like Duke Energy, and even natural gas producers like EQT.

All of those industries have benefited over the past couple of years from growing electricity use, particularly because of rising demand from AI data centers. But someone has to pay for all that new infrastructure to serve those plants—and some of the costs are already hitting consumers. The political backlash could curb the profits of the companies generating that power. States in the mid-Atlantic region, where prices are rising, have already advocated for the regional grid operator to make changes that will cap certain payments to power plant operators.

Renewable energy is the most exposed sector**,** because the companies are in the president’s crosshairs. President Donald Trump campaigned on cutting electricity prices in half—a goal that was never practically achievable and has only gotten more out of reach.

Lately, Trump has been blaming rising prices on renewable energy sources, such as wind turbines and solar panels. “Any State that has built and relied on WINDMILLS and SOLAR for power are seeing RECORD BREAKING INCREASES IN ELECTRICITY AND ENERGY COSTS,” he wrote on Truth Social last week, vowing to stop approving wind and solar projects. In particular, Trump wrote that New Jersey’s electricity rates are soaring because of wind turbines.

Trump’s claim doesn’t stand up to evidence: New Jersey has only six operating wind turbines, which collectively generate about 0.03% of the state’s electricity, according to the American Clean Power Association. Several other states that do depend on large amounts of renewables—such as Texas and Iowa—have relatively low electricity prices. And some states with low amounts of renewable resources, such as Connecticut, have very high electricity rates.

Trump is pushing an “energy culture war” that is disconnected from the reality of costs, says Tyson Slocum, director of Public Citizen’s energy program.

“He’s targeting wind and solar because he perceives those to be the favorite energy source of liberals and Democrats,” Slocum told Barron’s. “There’s no credible argument that they’re increasing costs.”

Consumer advocates like Slocum say Trump himself is to blame for some of the increases. His tariffs have raised costs for utilities, and will be passed on to consumers.

The Trump administration has added new costs for consumers by forcing power plant owners to keep old plants running even after they were scheduled to shut down, Slocum notes. The Department of Energy just extended an emergency order to keep a coal plant running in Michigan, and has mandated that an oil and gas plant in Pennsylvania also keep operating to bolster the electricity grid. The Michigan coal plant’s owner, which is a subsidiary of the publicly traded utility CMS Energy, has disclosed that the plant cost $29 million to operate for about five weeks, a cost that will have to be borne by ratepayers.

Michigan Attorney General Dana Nessel sued the Trump administration, saying the order was “an unlawful abuse of the Department’s emergency authority.” Nessel wrote that the state and the utility spent four years figuring out how to replace the coal plant with newer and more affordable electricity sources, and the emergency order was both unnecessary and expensive to consumers. A study by consultant Grid Strategies, funded by environmental groups including the Sierra Club, found that the administration’s plan to stop fossil fuel plants from closing could cost ratepayers $3.1 to $5.9 billion a year.

In response, Department of Energy spokesman Ben Dietderich wrote in a statement that the report was commissioned by “radical left environmentalists” and “is totally out of touch with reality.” He noted that grid operators have warned in recent years that shutting down power plants could cause reliability problems.

“The Department of Energy’s emergency authorizations have been essential in keeping the lights on and the cool air blowing during warm weather and the peak capacity events of this past summer,” he wrote.

The phase-down of solar and wind energy subsidies in the recently-passed Republican tax bill could also lead to higher prices for consumers. Solar power in particular is the largest source of new electricity generation—and wholesale prices are likely to rise after tax benefits are taken away.

Natural gas, the largest source of existing electricity generation, is expected to get more expensive as demand rises and the U.S. ships more gas overseas in liquefied form—and could send electricity prices higher.

Even if the U.S. figured out the perfect mix of renewables and fossil fuels to power the grid, that would only solve part of the problem. The biggest reason for utility rate increases in recent years has been the investments utilities are making in transmission and distribution, including the wires that send electricity from power plants to homes and businesses, according to Charles Hua, executive director of the nonprofit Powerlines, which is focused on regulatory reform in the electricity industry. A shortage of equipment like transformers could boost those costs even more.

Looking ahead, Hua thinks the cost of new electricity generation—like the natural gas plants that utilities are building for data centers—could become the largest driver of rate increases. There are ways to reduce the hit to consumer bills from all those plants, by pushing more of the costs onto the tech companies, for instance.

There are other possible solutions, too. In a recently-published paper, Tyler Norris, a Duke University fellow researching energy, argues that tech companies could reduce the need for more power by shutting down their data centers for just a few hours each year when electricity demand is highest. It’s an idea that is begun to gain traction among data center operators, and could reduce the strain on bills.

“It could bring down costs for everybody—the companies, the small businesses, the industrial and manufacturing plants, and you and I as regular consumers,” Hua told Barron’s.

Write to Avi Salzman at avi.salzman@barrons.com