Lawrence Berkeley National Laboratory Reports on Rising Electricity Rates
Residential electricity prices increased by 25% during President Biden’s term and continue to rise as artificial intelligence (AI) drives higher electricity demand.
Key Findings from the Study
The Lawrence Berkeley National Laboratory identified that the main contributors to higher electricity prices between 2019 and 2024 were utility expenditures on:
- Distribution
- Transmission
- Disaster recovery
- Some clean energy programs
State-Level Price Increases
Seventeen states saw inflation-adjusted electricity prices increase, with the highest rises in California, Hawaii, Connecticut, Massachusetts, Maine, Rhode Island, and New York.
Renewable Energy Mandates
These states enforce renewable portfolio standards that require renewable energy usage regardless of cost, which added roughly one cent per kilowatt hour to electricity prices.
These policies raised electricity prices by one cent per kilowatt hour.
Regional Greenhouse Gas Initiative
Many affected states belong to the Regional Greenhouse Gas Initiative, a coalition of 11 states using a cap-and-trade system that effectively taxes fossil fuel usage within the utility sector.
California’s Wildfire-Related Costs
In California, wildfire mitigation expenses between 2019 and 2024 contributed approximately four cents per kilowatt hour to electricity rates, increasing average monthly bills by about $30.
Increased wildfire spending from 2019 to 2024 added about four cents per kilowatt hour to rates and caused bills to rise an average of $30 a month.
Future Outlook
Electricity prices are expected to keep rising as growing electrification and AI advancements boost overall electricity consumption.
Author's Summary: Rising electricity costs are driven by utility infrastructure spending, renewable energy mandates, and climate-related expenses, with further increases anticipated due to AI and electrification.