Price of electric power

The price of electric power in the United States is estimated at 13.3 cents per kilowatt-hour in 2025, marking a continued trend of elevated prices attributed to persistent inflationary pressures, ongoing supply chain disruptions, and increased operating costs for electricity providers. Extreme climate events, such as heat waves and cold snaps, also put additional strain on US power grids, further challenging utilities' ability to control pricing. These factors, compounded by persistent global instability from the Russian invasion of Ukraine, have helped sustain upward pressure on electricity prices through 2025.

Electricity prices in the United States rose at a compound annual growth rate of 4.7% throughout the five years to 2025. The trend was shaped by significant volatility from the COVID-19 pandemic, global energy market disruptions, and U.S. economic recovery. In 2020, commercial and industrial electricity demand fell sharply due to lockdowns and work-from-home arrangements, while residential consumption increased, resulting in a negligible overall price uptick of 0.5%. As pandemic restrictions eased and the economy reopened in 2021, electricity usage surged, driving a 4.8% price increase. A significant acceleration occurred in 2022, with electricity prices growing by 11.6% year-over-year, primarily linked to the onset of the Russian invasion of Ukraine, which tightened global fuel supply chains and raised input costs, particularly for natural gas and oil. Supply chain bottlenecks, inflation, and elevated prices for key grid materials such as aluminum also contributed to this spike. Inflationary pressures persisted in 2023, but price growth moderated to 2.4% annually in late 2023 and 2024, as input cost volatility somewhat stabilized, but overall cost pressures remained. The generation mix transitioned from coal to natural gas and nuclear power over the period, reflecting broader trends toward cleaner-burning sources and technological advances in natural gas extraction methods.

Climate-related stressors on the US energy infrastructure have also become a notable trend within the period, as utilities incurred added expenditures for system fortification, maintenance, and modernization to address increased weather-related disruptions. These necessary investments, coupled with inflation, sustained an upward trajectory in electricity prices. Regulatory environments at the federal and state levels have continued to mitigate price escalation to some extent, but persistent upward pressure has been evident through 2025.

As a result, US electricity prices rose from 10.6 cents in 2020 to 13.3 cents in 2025, reflecting the convergence of higher input costs, increased demand volatility from macro shocks, supply chain constraints, infrastructure strain from extreme weather, and inflation-driven cost pass-through by utilities.