Expect a backlash. Residential customers pay double the industrial rate.
The US EIA report on Electricity Prices for September 2025 shows a big surge in prices.
Key Cost Points
- Residential: 18.07 Cents per kWh, up 7.4%
- Commercial: 14.06 Cents per kWh, up 6.3%
- Industrial: 9.02 Cents per kWh, up 6.7%
- Transportation: 15.26 Cents per kWh, up 16.6%
- Total: 14.23 Cents per kWh, up 6.7%
Residential customers pay over twice as much as industrial customers.
Some of this is explained by consistent industrial demand and contracts. But how inconsistent is residential demand?
Sure, residential demand is seasonal. And there are daily fluctuations. But there is also a consistent base minimum load that generally grows over time.
And industrial demand is not constant either. For example, GM is not producing cars 24 hours a day.
US Households Pay Record Prices
Bloomberg notes US Households Pay Record Electricity Prices
The figures highlight the rising pressure consumers are facing from higher energy bills, as increased power consumption from data centers and industrial users boost prices. While electricity typically fluctuates from month to month due to weather, fuel costs and other reasons, the data shows that power prices have been steadily marching higher for the past five years.
A notable part of the increase comes from natural gas. September prices for the biggest source of US power were up 30% from a year earlier.
CPI Electricity and Natural Gas
CPI Electricity and Natural Gas Detail
Electricity and Natural Gas Price Index Details
- Electricity: Up 37.4 percent since January 2020
- Electricity: Up 5.4 percent from year ago
- Natural Gas: Up 49.4 percent since January 2020
- Electricity: Up 11.9 percent from year ago
These price trends are ominous and they are about to get worse.
AI-Related Demand Is Soaring
Please note AI Data Centers Are Sending Power Bills Soaring
It’s an increasingly dramatic ripple effect of the AI boom as energy-hungry data centers send power costs to records in much of the US, pulling everyday households into paying for the digital economy.
The power needs of the massive complexes are rapidly driving up electricity bills — piling onto the rising prices for food, housing and other essentials already straining consumers. That’s starting to have economic and political reverberations across the country as utilities and local officials wrestle over how to divvy up the costs. Yet those same facilities are a linchpin of US leadership in the global AI race.
A Bloomberg News analysis of wholesale electricity prices for tens of thousands of locations across the country reveals the effects of the AI boom on the power market with unprecedented granularity. The locations and prices were tracked and aggregated monthly by Grid Status, an energy data analytics platform. Bloomberg analyzed this data in relation to data center locations, from DC Byte, and found that electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data center activity.
Huge Backlash Coming
Consumers are already at a breaking point. Tariffs have raised prices on imports and are destroying jobs.
Someone has to pay the price of new data centers, and that someone is primarily residential customers.
Commercial customers are hit hard too, but they will pass on their share to consumers.
But that’s OK because I have it on great authority that Trump will fix everything in 2026.
Trump Adopts Chicago Cubs’ Perpetual Message, “Wait Till Next Year”
Please note Trump Adopts Chicago Cubs’ Perpetual Message, “Wait Till Next Year”
“One Big Beautiful Bill” did not resonate. Trump opts for “Wait Till 2026”
But “Wait Till 2026” is a fundamental mistake. When 2026 is bad, the message will have to change.
The beauty of a more Cub-esque “Wait Till Next Year” is the slogan never has to change.
Related Posts
March 13, 2025: The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture
I hope you can take a bit of headline sarcasm because the true story follows.
September 6, 2025: Trump’s Aluminum Tariffs Seriously Backfire Already
Tariffs did not and will not bring production back to the US.
ISM Manufacturing Contracts for the 35th Time in 37 Months
Finally, please consider my post from today ISM Manufacturing Contracts for the 35th Time in 37 Months
Here’s a pertinent comment: “We are starting to institute more permanent changes due to the tariff environment. This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.” (Transportation Equipment)
Hoot of the Day: That company is developing more offshore manufacturing and firing US staff, not bringing more manufacturing back to the US.
To repeat: Tariffs did not and will not bring production back to the US. They are a guaranteed job destroyer.
Steel and aluminum explain why. For every steel or aluminum job gain, there are tens-of-thousands of users and buyers of steel and aluminum, all of which lose from tariffs.
So, if you are rooting for more tariffs, you are a brainwashed, tariff-loving economic illiterate (like Trump and Biden) rooting for net job losses. Alternatively, you are someone in the industry spouting economic nonsense for personal gain.
Casualties Start
Please note Value City Furniture Goes Bankrupt, Cites Tariffs, 120 Stores Will Close
American Signature, Inc., parent of VCF, filed for Bankruptcy. Fallout in 17 states.
Addendum
Several readers from California chimed in. They would love to pay average US electricity rates.
Here is one such comment, with multiple CA readers noting this rate.
Top tier rate (which kicks in almost instantly) of 49 cents per kWh here in CA, per my latest bill. I know everyone here hates Trump, but please consider Newsom. I know very old people who are cold all night and all day because of this.
I don’t live near enough to bubble wrap their windows, but I am working on finding someone to do it. And no there are no government programs that would work for them.
Another Comment
My cost of electricity is more than twice the residential figure given above. I doubt that many AI data centers will be locating in most of the San Francisco Bay area or other parts of northern California serviced by Pacific Gas & Electric.
I would suggest taking a look at a recent study from Lawrence Berkeley National Laboratory on recent prices in the electricity markets. What consumers are paying for in many cases are for upgrades in transmission and distribution lines and equipment like transformers, etc.
These are the primary drivers:
Also, note toward the end of the presentation that the study finds
I would suggest taking a look at a recent study from Lawrence Berkeley National Laboratory on recent prices in the electricity markets. What consumers are paying for in many cases are for upgrades in transmission and distribution lines and equipment like transformers, etc.
These are the primary drivers:
Also, note toward the end of the presentation that the study finds
https://eta-publications.lbl.gov/sites/default/files/2025-10/presentation_retail_price_trends_drivers.pdf (short presentation)
https://eta-publications.lbl.gov/sites/default/files/2025-10/full_summary_retail_price_trends_drivers.pdf (long presentation)
https://eta-publications.lbl.gov/publications/factors-influencing-recent-trends (link to go to the journal publication)
I live in a state with one of the cheapest energy cots. Yet, just last, the minimal utilities raised the residential rates by 5%, after a two year respite. In the last 5 years, thanks to the US sabotaging the Nord Stream gas pipelines to Germany and increased demand for US gas by Europe, the rates are up by 30%. In real numbers, it now sits at about 15¢/kWh, from less than 10¢/kWh in 2020.
I have a question for any economist reading MishTalk: Why is electricity from newly built power sources more expensive (adjusted for inflation) than electricity from existing power sources? (Obviously, the fact it is associated with new AI data centers does not provide the answer to the question.
Construction costs, labor, materials costs, and interest on debt have all risen.
Mish is correct. Those all contribute to higher costs.
As do aging electricity grids. The cost of electricity includes distribution and transmission costs which are rising rapidly as our very old and outdated grid is expanded, updated and upgraded. In fact, the actual electricity cost is often a small part of your bill.
One example. The cost of generating electricity from solar has dropped from 40 cents per kwh to 4 cent per kwh over the last 15 years. These savings have been offset by the increased transmission and distribution costs.
In the same timeframe, the cost to generate nuclear has risen from 10 cents per kWh to 15 cents.
I have a background in both power generation and various large process industries. Contracts for large process industry electricity users are often interruptible, which residential is not. One gets a significant discount on rates if one is willing to be load shed on short notice in an emergency. (Demand charge heavily discounted since your capacity is conditional, not firm. So it is not just consistency of load, but also willingness to be shed from grid in an emergency and give up your “demand”, that reduces the rate to industrial customers.
Why on earth should residential customers pay more for electricity and get worse service…..plus why should they fund data centres for big profitable business.
Not sure if newsome is the total reason power is high in ca. California already has 326 data centers. So maybe were ground zero for them. Pge is playing catchup. For years executives had stellar profits then retired right before they the got called out. Fire mitigation Now the air quality board. Yeah a good chunk of that is newsome. Imo that the big increase in gas tax is so gas will stay more expensive than electricity to keep more people moving to ev and dense housing.
Virginia has well over 600 data centers and is adding more, though capacity is diminishing, and Virginia has seen electricity rates decline. They’re probably going to be going up in the near future, but it doesn’t appear to be the case that data centers are the sole driver of increases in electric rates, but that other factors are the primary drivers of rate increases. I’ve posted up above about a recent study from Berkeley National Laboratory that identifies the issues. Now, given what they’ve seen, to the extent that grids need to be modernized to accommodate data centers or other large loads, those loads could represent an indirect push for higher rates.
“Residential customers pay over twice as much as industrial customers.” has been true forever.
— My electricity cost increase feels much higher than the above numbers. It’s time for some to laugh in the faces of those who thought that “data centers bring jobs” etc. Clueless politicians, they hear “high tech” and their imagination goes wild.
— I am more interested in Europe though, because that’s where the “green” policies are crushing down, along with Bill Gates’ recent admission. The cost impact on the population is not mentioned in the American press, and videos of people spending cold days in public facilities in the UK (they’re not brown enough to deserve paid long-term hotel stays) are not posted on YouTube. While Americans are drama queens, screaming their issues to the entire world, Europeans are hush-hush and you face their realities only if you move there with a locally-based income.
— The fraudulent methods by which the German government tried to make it look good deserves to go into economic textbooks. They are operating the coal plants 24/7, but only connecting them to the grid during the night… and then claim that daylight electricity comes from green sources (it does, but the coal plants are still on during the day, though unconnected). The Germans achieved higher pollution with higher cost and prices at the same time. Success comrades. Now go destroy a couple more portrait paintings in galleries to satisfy the local mullah, and tell them it’s for the environment.
— Last year I read in a small tech/photo blog a statement of the owner in California that he was terribly cold because his electric bill exceeded $1,000 or so. California normally should not have such problems, given the abundance of both green and manmade energy sources. But I have no doubt that if the Democrats win majorities in 2028, such policies will spread nationwide, despite the green nonsense going in reverse elsewhere. Much of the Midwest will be abandoned in such a case or become a permanent federally-financed cripple.
— Energy cost is the No. 1 factor in food price inflation in my opinion, and it drives up other prices up too, disproportionately. And I feel I was the only one saying that, when everyone else was pointing at “money printing” etc. High energy consumption is involved in every single step of food (harvesting, production, transportation, refrigeration, etc.).
— The USA is a new country, and needs a lot of energy to grow. Unfortunately we have way too many politicians who put ideology uber alles. Because of that, I’m not optimistic. I’d rather have Trump playing Mr. Taco trying but also reversing course when things don’t work, than European-like ideologues who can maintain destructive policies for decades.
The average out-of-pocket cost of health care for a non-subsidized family in 2025 is about 6850 and is expected to increase by 18% in 2026 (likely higher without subsidies). The average energy bill is 1860 with a 6.7% increase over last year. The average wage growth is 4.2% on an median family income of 85000 and some of that population are losing jobs with unemployment rising and current (Sept data) at the 4.4% area ramp-up to the steep portion of the curve. Doing the math, there is not much wiggle room in 2026 for the American family, and the idea of a single added extra straw breaking a straw-laden camel’s back come to mind.
For entertainment purposes only, this Thursday and Friday are terminal days of second fractals in two slightly different fractal decay series models with expected equity losses of at least 10-12% over the nest two trading days.
(electricity, not total energy)
$6850? When I was contracting, it was14k for ME, and I never went to the doctor.
Here’s a question. New power plant capacity is traditionally funded by selling bonds, not operating cash flow. Revenues for paying off the bonds (and operating costs) traditionally come the new customers using the increased capacity. Why isn’t this happening in this situation? What has changed with the energy market?
Rapidly Increasing demand in a short time frame. After decades of minimal demand growth.
Ai routinely gives me incorrect answers. It is not worth the electricity or my time spent on it.
It’ll get you 80% of the way, for small, simple problems.
It depends on how you ask it. To prove this, I asked “is too much glass in a lens affecting its quality?” and it answered me “Yes because blah blah”.
Then I asked it “is the Zeiss Otus 55 a good lens despite too much glass in it?” and it answered me “Yes, it’s excellent precisely because of its complex design etc etc.”.
It always wants to agree with you and modifies the answer accordingly.
In another case, I asked it about an Adobe Acrobat function, and it pulled, word for word, the answer that some clueless guy had posted on reddit (but it didn’t tell me it found it on reddit, I had already found that bad response myself before).
I have often asked it direct, simple questions and gotten wrong answers.
Ask it with a bias. Then ask with the opposite bias. You may get different responses. Mostly garbage, I know. And they sell it to companies to replace their employees.
And if, by data centers, you are also including the completely useless (to most people not speculating in them) cryptocurrencies and the costs to mine them, their massive electricity demand sucked up to the detriment of 99.9% of the population that doesn’t have a need for them in their daily lives, then yes, data centers. I don’t know of one person in my life or in their daily transactions that is thankful and has a need for a cryptocurrency. Fostering a pipe dream digital currency that consumes so much power and is and has been completely unnecessary and energy-expensive is energy/financial malpractice as egregious as the government-dilution of exisitng fiat currencies they are allegedly to replace. The equivalent of the entire upper midwest (and growing) daily electricity consumption wasted on cryptocurrencies globally is a head-smacking V8 moment.
I maintain that lumping cryptocurrency activities into the category of AI data centers is by design. One can argue that AI data centers have selling points like productivity gains, efficiencies, medical research and treatment advancements, rapid problem solving…….but cryptocurrency? Failure to separate it out is intentional as it perpetuates and masks the utter waste of electricity on a “store of value(?)” “replacement government-independent currency” that to most people cannot be the cause of their electricity inflation for daily living. It just can’t consume that much power. And yet it does.
Frustrating.
Have to say, more than an upvote. Well said
Remember the time Silicon Valley was producing useful things, was creating jobs, and was promoting free speech and dissemination of ideas?
Now it’s the opposite. For many professionals, the New Silicon Valley is now the enemy, destroying their jobs and stealing their ideas before they even posted them (hidden keylog telemetry masquerading as “autofill”), creating useless products, censoring ideas the bosses don’t like, and producing only monthly subscriptions.
Cryptocurrency is more like an online casino.
You have tapped into my concern. Crypto has no intrinsic value, and its wild fluctuations prove that.
Ruh-Roh. Time for Polar Vorex temperatures and Bomb Cyclones and the legendary Nor’Easters. Woocoodanoode? Time for everyone in the northeast to storm their liquor stores until the shelves are bare.
AI companies need all the power so they can either put you out of a job or crash the stock market.
Top tier rate (which kicks in almost instantly) of 49 cents per kWh here in CA, per my latest bill. I know everyone here hates Trump, but please consider Newsom. I know very old people who are cold all night and all day because of this. I don’t live near enough to bubble wrap their windows, but I am working on finding someone to do it. And no there are no government programs that would work for them.
Thanks for posting. I added your comment as an addendum.
Best wishes.
Mish
And just a reminder that Peoples Gas in Chicago has “special contracts” for natgas they source so they dont even follow transparent natgas commodity prices. Im sure in many electric cases its the same thing. You really have no idea what prices you inevitably are paying for wholesale energy.
Several years ago Peoples Gas ‘persuaded’ the Illinois Legislature etc. to approve that the taxpayers / customers pay for the remediation of their old Manufactured Gas Plants (MGP sites) over the decades. Many were located along the “angle” streets on the city maps.
My cost of electricity is more than twice the residential figure given above. I doubt that many AI data centers will be locating in most of the San Francisco Bay area or other parts of northern California serviced by Pacific Gas & Electric.
I have PG@E, Bay Area, and per my last bill the top tier (which kicks in almost instantly) was 49 cents/kwh last month. The numbers in the article sound like a happy dream.
we’re paying .33/kwh just outside of LA thanks to SCE. .49/kwh is nearly what Tesla charges to use their chargers. Wow.
Perhaps the AI data centers will get a sweetheart price because of the many quality long-term jobs they will be providing in the region. /s
This is irrelevant since energy and food are not important.
You can understand this because energy and food are not included in the Government CPI that keeps us informed about inflation’s costs for consumers.
We have to find a way to get the next generation of nuclear power plants out. Between AI data centers and electric vehicle charging the need for a massive ramping up of electricity is clear.
Nuclear seems like a good sector to be investing in.
In the mid-1990s Argonne National Labs in Illinois had the mini-nuclear reactors ready for commercial development. The guy who invented the internet and global warming killed it.
Lol! Funny! Just like he killed the carburetor that gets 200 mpg and the engine that runs on air.
Nuclear is great, but it’s simply too expensive. No one has been able to make SMRs cheap enough to be useful after 70 years of trying. And there are currently over 40 countries plus 50 companies trying.
Again, we can have more and more data centers or we can have affordable, quality food. We can’t have both. Pick one.
We just need to build the data centers in countries with plenty of available cheap power. Canada, Iceland, Norway, Qatar, China.
How much of the rise in electricity is due to the closing of power plants during the Biden Admin vs the build out of AI data centers? I would argue that most of the increase is due to the closure of power plants as most data centers are nothing more than drawings on paper. However, the increases in electricity costs when all these data centers come online will be much higher than what we are experiencing now.
Backwards looking never a good idea I can’t hear this administration talking about upgrading the electric grid Biden is gone give me more excuses hot air won’t do….
you voted for the celery stick. own it. you’re part of the problem.
Neither left or right always the center your turn…….
Yes, everyone is forgetting the power plant closures under Biden. Data centers are a disaster too, but the closures started it.
I grew up 10 miles from Indian Point. Another closure and it cannot be reopened.
I can still remember the No Nukes Concert in 1979, a later one in 1982 as Bruce Springsteen was turning his Marshall stack up to 10 complaining about nuclear power all the while the feed to power it was coming from you guessed it, Indian Point Nuclear reactor.
The hypocricy is only 10 times worse today when you factor in hollywood & music so called stars complaining about global warming as they fly their private jets on a personal vacation.
Hmmm, Biden didn’t close any power plants here in Florida, and the public utilities commission (all appointed by Ron DeSantis) just approved a major rate hike for FPL.
The US has closed 50% of its coal generating plants since 2008, under all administrations. The plants closed primarily because they were old and uneconomic. The same goes for the 11 nuclear plants that have closed since 2013.
They were replaced by natural gas and renewables, which are cheaper and faster to build.
If you want electricity prices to rise more slowly, then you need to build a lot more natural gas and renewables generation.
Build more data centers for AI to find a solution. Bring in Greta to cut the ribbon whenever they open a new one.
greta’s too busy dying the water in Venice. You know…. for the children.
The upcoming battle for electricity between data centers and residential (Joe Sixpack) is going to be one of THE biggest stories of the next decade.
It’s not hard to imagine data centers being demonized for high electric costs that initially spur protests that are later followed by violence (bombing data centers).
That’s assuming the AI bubble continues to inflate.
It doesn’t need to inflate more, there are thousands of chips sitting in warehouses and data centers built but there’s not enough electricity for it all.
https://finance.yahoo.com/news/electricity-shortages-threaten-pull-plug-000000189.html
Are they going to run them without paying customers indefinitely?
LOL!!! It is like the airport here in Denver, DIA. All the costs/benefit analysis for the project did not include the roads to get there. I am very long natural gas.
Yes, and local water supplies, too.
The local version of the problem;
https://www.yoursourceone.com/columbia_basin/grant-pud-says-proposed-rate-hikes-through-2035-would-still-keep-local-power-costs-below/article_46e394b8-6b79-4361-9091-fe95221fe0a0.html
“The update came as part of an ongoing staff analysis showing that Grant PUD will need average annual increases of 3.5% for residential, agricultural, and small-business customers — the utility’s “core customers” — through 2035. Its largest, most energy-intensive users, classified as “non-core customers,” would see average annual increases of 9.5%.”
Economy
November private payrolls unexpectedly fell by 32,000, led by steep small business job cuts, ADP reports
Also economy
Did you know Trump has added 2.2 trillion to the national debt since taking office 10 months ago?
Ah, finally a topic labeled as economics that is actually economics.
Natural gas prices have been rising for the last year and look to continue rising. Natural gas production in the US is primarily a result of fracking for it as well as being a byproduct of fracking for oil (nafta). The prices are rising for two primary reasons: the US ended the ban on exporting nat gas during the first Trump administration so prices are beginning to to go up to international levels, and OPEC has been increasing output, reducing prices for petroleum, making US fracking less profitable. So US production of oil isn’t expanding at the needed pace. So supply and demand: supply being reduced through exports and lower production, while demand increasing. The problem could be resolved through massive increases in solar and wind production, but those decrease the profits of the oil industry, which are major campaign donors to MAGA politicians.
Hate to break it to you but GM does produce cars 24×7. When it’s $100,000/hr in lost opportunity costs to close a line and pennies to make a seat belt, you can bet your butt they keep those plants open. They even pay a premium for the graveyard shifts.
What they aren’t doing 24×7 is everything but manufacturing. There’s some energy fluctuations there but not much. The lights are still on.
Is there anything to the idea that consumers lack the bargaining power of industry to negotiate price guarantees and business volume assurances.
”Affordability is a democrat hoax!” – PedoPig
Yes, he really said it.
ADP report -32K vs expected +40k right at holiday season. The Trump economy stinks.
Electricity rates soaring you say? If only someone had warned us 😉 Oh wait I did for years now!
And it will only get worse with Trump canceling all those green energy projects at a time demand is soaring for data centers. Electricity is the new gold/oil.
This completes the food, insurance and electric warnings I gave you guys, ready for the next one? I’ll keep you in suspense because I’m still positioning for profits. 😉
We need more base load capacity. Mainly nuclear.
Coming right up in about 20+ years.
Maybe we should hire China to build thorium reactors for us.
Manufacturing is supposed to come back right? Where are the workers?
Construction is already experiencing massive shortage of workers so who’s going to build those plants?
https://www.constructiondive.com/news/what-builders-miss-gen-z-labor-shortage/806471/
Additionally, the DOL reports that in 2024, workers aged 18 to 25 accounted for nearly 25% of all new hires in skilled trade industries. This evidence indicates that instead of having to convince Gen Z to enter the trades, there is now a growing talent pool actively pursuing trade opportunities.
According to research conducted by Randstad, the average job tenure for Gen Z in the first five years of their career is only about one year. Further, one in three Gen Z workers plans to change jobs within the next year.
Only 1/4 young people are interested in trades then only stay for 1 year anyway.
Trades are generally hard work, and don’t allow you to dick around with your phone all day. I would guess it’s the second restriction that runs them off.
China has ONE experimental thorium reactor that’s being tested. They have no plans to build more of them.
Instead they are currently building around 30 conventional nuclear reactors because the technology works, even though it is expensive.
They are also working on SMRs, like many other countries and companies. With no plans to mass produce them because they are still too expensive.
It takes China 7-8 years to build a conventional nuclear reactor while it takes us 15 years.
But China is building 10x more renewable energy than nuclear. Why? Because it is so much cheaper.
Natural Gas is the way forward in the near term. Nuclear as MPO45v2 notes will take a decade or longer to come online in enough capacity to matter.
oops
I agree on natural gas. Regarding nuclear – we better get going, then. A decade goes by quickly.
Natural gas is one of the cheapest ways to generate electricity. Problem is, there is a 2-4 year wait list for gas turbines. If we could get the turbines, we could generate a lot of electricity.
But because of the gas turbine shortage, we must build more renewables; solar, onshore wind, and battery storage to go with it. Because we can’t wait 15 years for nuclear.
Fortunately, renewables are even cheaper than natural gas generation.
I’d suggest water is going to be the new gold/oil.
Water, health care, and labor are givens already. The challenge is figuring out how to profit from these. It’s challenging because the government can come in and change the whole dynamic as we’ve seen already.
I’m talking about something that’s as difficult to control as food, insurance and electricity. These three have something in common.
Yes, unlike oil/gold/water they are essentially infinite in that we can create more of them as desired to meet demand.
another Biden success
the of stealing russias hundreds of billions is a direct cause
as his boss said “its going to get worse”
Belgium isn’t letting the Russians’ money be stolen, since it would crater Euroclear.
Keep in mind CEOs of manufacturing continue to give themselves raises while cutting workers.
Data centers are concentrated in these states. Here’s what’s happening to electricity prices
https://www.cnbc.com/2025/11/14/data-centers-are-concentrated-in-these-states-heres-whats-happening-to-electricity-prices-.html
Not sure what these figures show, other than energy prices in IL and OH rose for no obvious reason.