Rising Electricity Prices Started Long Before AI, and Should Not Be Politicized Incorrectly

In recent months, skyrocketing electricity bills have become a flashpoint in American households and political debates alike. With average U.S. residential prices climbing from around 13 cents per kilowatt-hour (kWh) in 2020 to 19 cents per kWh in 2025, consumers are feeling the pinch.

Many pundits and policymakers have pointed fingers at the explosive growth of AI data centers, which are indeed power-hungry beasts projected to double U.S. electricity demand by 2035.

However, this narrative overlooks a crucial truth: the upward trajectory in electricity costs began well before AI’s surge, rooted in policy-driven shifts toward intermittent renewables like wind and solar, the decommissioning of reliable coal plants, and the massive costs of grid upgrades—including new transmission lines—that are ultimately passed on to everyday consumers. Worse yet, this issue is being politicized in misleading ways, with some Democrats seizing on “affordability” as a cudgel against the Trump administration, even though the bulk of the increases occurred under prior leadership.

To set the record straight, let’s examine the data and drivers behind these price hikes, drawing on expert analyses and recent reporting. The goal isn’t to assign partisan blame but to highlight how misguided policies have long contributed to the problem, and why politicizing it incorrectly distracts from real solutions.

Historical Trends: Prices Were Rising Before AI Took Center Stage

Electricity prices in the U.S. were remarkably stable for nearly a decade prior to 2020, hovering around 10-13 cents per kWh nationally. But starting in 2020, they began a steady climb, accelerating to a 28% increase over the subsequent five years—reaching an average of 13.54 cents per kWh by 2025.

This surge predates the widespread adoption of AI technologies, which only began significantly impacting demand around 2023-2024.

Here’s a breakdown of national average residential electricity prices over time, based on U.S. Energy Information Administration data referenced in key reports:

The timing aligns not with AI but with a wave of utility rate hike requests that exploded from $3.6 billion in 2020 to $11.3 billion in 2021, reaching record highs of $29 billion in the first half of 2025 alone.

Approval rates for these hikes by utility commissions jumped from 36-48% pre-2019 to 56-67% afterward, directly translating to higher bills for consumers.

The Real Drivers: Renewables, Transmission Costs, and Policy Choices

Far from being an AI-only story, the root causes trace back to the so-called “energy transition.” Utilities have poured billions into replacing dispatchable sources like coal and nuclear with intermittent wind and solar, necessitating expensive grid reinforcements. For instance, coal plant retirements—over 2,500 MW in regions like PJM—have outpaced new additions, creating supply shortfalls as early as 2026.

This shift, often mandated by state clean energy goals (e.g., New York’s 70% renewables by 2030 or Virginia’s 100% carbon-free by 2045), has driven up costs without delivering proportional reliability.A key culprit is the ballooning expense of new transmission lines and infrastructure to integrate far-flung wind and solar farms into the grid. These costs are “socialized,” meaning they’re spread across all ratepayers, regardless of who benefits. Reporting highlights how utilities are passing on billions in upgrades: for example, PJM approved $5.9 billion in new transmission projects tied to load growth, including renewables integration, leading to household bill increases of up to $17 per month in some areas.

Major players like Consolidated Edison ($1.6 billion request) and Pacific Gas & Electric ($1.8 billion) explicitly cite clean energy resiliency and transmission upgrades in their filings.

Even as federal subsidies like those in the Inflation Reduction Act (often satirized as the “One Big Beautiful Bill Act”) offset some developer costs, the burden shifts to taxpayers and consumers through higher rates.

Natural gas prices have also played a role, rising from $2 per thousand cubic feet in 2024 to over $3 in 2025, with residential rates jumping from $17 to $19 per mcf.

Yet, despite the U.S. being the world’s top producer of natural gas and oil, policies prioritizing exports and renewables have prevented these savings from fully reaching households.

While AI data centers are exacerbating demand—pushing wholesale prices up 267% in hotspots like Virginia—these facilities are often scapegoated for a problem that was already brewing.

In reality, the combination of renewables’ intermittency, grid modernization, and plant closures has created a perfect storm, resulting in hundreds of thousands of utility disconnections annually due to unaffordability.

The Political Missteps: Affordability as a Partisan Weapon

This brings us to the politicization. Democrats have increasingly spotlighted electricity affordability as a “winning issue” for the 2026 midterms, criticizing the Trump administration’s energy policies—like scaling back green incentives—for allegedly driving up costs.

Some blame the “One Big Beautiful Bill Act” (a jab at prior legislation) or Trump’s focus on deregulation and fossil fuels for recent spikes.

In states like Florida, where 12 million residents face the largest rate hike in state history, Democratic leaders are pointing fingers at federal policies under Trump.

Yet, this framing ignores the timeline: the sharpest increases happened well before Trump’s return to office in 2025, under the Biden administration’s push for wind, solar, and coal phaseouts.

As one analysis notes, both sides are off-base—Trump blames excessive green energy, while Democrats point to anti-renewable campaigns—but the core issue is longstanding policy misalignments favoring emissions reductions over reliability and cost.

The White House counters that prices are higher in Democratic-led states reliant on renewables, underscoring how state-level mandates exacerbate the problem.

Politicizing affordability this way does a disservice to consumers. It turns a solvable energy challenge into a partisan battle, distracting from bipartisan truths: the U.S. has abundant resources (13.8 million barrels of oil and 132 billion cubic feet of natural gas daily, plus vast coal reserves) that could deliver cheap, reliable power if prioritized over intermittent sources.

Toward Solutions: Prioritizing Reliability Over Rhetoric

To reverse course, utilities and policymakers should halt premature coal retirements, expand natural gas generation, and rethink mandates that force costly wind and solar integrations without adequate backups. Savings from low-cost fuels like natural gas should be passed directly to consumers, not siphoned into exports or subsidies. As experts argue, focusing on dispatchable energy sources will not only curb prices but also bolster U.S. manufacturing against competitors like China, where coal-powered electricity costs as little as 3 cents per kWh.

Rising electricity prices are a real crisis, but blaming AI alone—or wielding affordability as a political weapon—misses the mark. By acknowledging the long-standing roots in policy choices and grid transformations, we can move beyond incorrect politicization and toward an energy future that’s abundant, affordable, and secure for all Americans.

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