“All of those factors are combining to create a scenario in which there could be long-lived year-over-year increases in electricity prices,” said John Quigley, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania.
High electricity prices hit the poorest households the hardest since they spend a larger share of their money on their power bills. Power shutoffs due to nonpayment were already rising at the beginning of the year. Close to 80 million Americans have to trade off between paying their electricity bills and other expenses like health care and housing, and utilities are asking their regulators to raise rates further. “To a big segment of households—lower-income, even moderate-income households—it’s already a crisis,” Quigley said.
But there is some important context you have to consider, and some of the big-picture trends are actually working to help us spend less on energy and reduce our impact on the environment. How quickly this happens, though, will depend on policy decisions in the near term.
One thing to keep in mind is that electricity is just one form of energy that you use. You may also have to pay for natural gas for heating and cooking, as well as gasoline for your sedan or pickup truck. But many American homes are electrifying, trading gas furnaces for more efficient heat pumps, gas burners for induction stoves, and V-8 engines for electric motors. Electric Power Research Institute, a nonprofit think tank, dubbed this combined basket of household electricity and fuel spending the “energy wallet,” using it as a way to track how these trends are changing over time while accounting for fuel switching.
Last month, EPRI released a report calculating that in 2024, the average annual US energy wallet spending was $5,530 per household. Gasoline was the largest slice of that pie, at $2,930 per household, while electricity was $1,850. Adjusting for inflation, overall energy spending has actually held fairly steady since 2000. And prior to 2024, electricity spending was mostly level as well. Perhaps it’s more remarkable that overall energy spending was so stable for so long.