CORINEXT | America’s Power Problem: Rising Electricity Costs Hit Households Hard

Con Edison, one of the largest investor-owned electric utilities in the United States (U.S.) and the primary provider for New York City, ended 2024 with about 16 percent of its customers behind on their bills, with debts nearing US$950 million in total. Now they are cutting power to more households than ever in recent years. Between January and June 2025, Con Edison disconnected more than 88,000 homes, about 2.5 percent of its customer base, triple the number from the same period a year earlier. This surge reflects the growing strain on households as electricity costs climb.

The pain extends nationwide. Across the U.S., residential electricity rates have risen more than 30 percent on average since 2020 and nearly twice as fast as inflation in the past year, underscoring continued pressure on households. In a March 2025 PowerLines and Ipsos survey, about 73 percent of respondents said they were concerned about rising utility bills. “American energy consumers are hurting and they’re stressed out,” said Charles Hua, executive director at PowerLines.

Multiple forces are driving the surge. Utilities are spending billions to replace aging infrastructure and a slow shift to renewables has given little relief. The result is a power system under mounting pressure to modernize while keeping costs manageable.

As prices climb, the debate is shifting from why costs are rising to how to rein them in. The challenge lies in balancing modernization with affordability: investing in the grid of the future without leaving more Americans in the dark.

The Grid’s Expensive Makeover

A major driver of rising electricity rates is the wave of capital investment sweeping through the utility industry. Companies are spending heavily to replace and upgrade infrastructure to satisfy the needs of geopolitically and nationally strategic industries such as semiconductor manufacturing, artificial intelligence (AI), and battery production.

Much of the U.S. electric grid was built in the 1960s and 1970s. Today, more than 70 percent is over 25 years old, and more than half of all in-service distribution transformers are older than 33 years and nearing the end of their useful life (Graph 1). The aging network has become a growing liability, demanding massive reinvestment to prevent reliability risks and meet future power needs.

Graph 1: Age Distribution of In-Service Transformers in the U.S.

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America’s investor-owned electric utilities are now preparing one of the largest modernization drives in industry history to meet surging electricity demand and a transformed energy landscape. Over the next five years, they plan to invest more than US$1.1 trillion to enhance and expand the grid, according to the Edison Electric Institute, a record pace compared to US$1.3 trillion spent over the past decade (Graph 2).

Graph 2: EEI Industry Capital Expenditures 2015-2029

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Spending on distribution systems has surged, hitting residential customers hardest since those networks deliver power directly to homes and small businesses. “The predominant driver of recent utility bill increases has been rising transmission and distribution costs rather than generation costs,” the PowerLines report said. “Ballooning distribution system expenses have placed particular upward pressure on utility bills.” Distribution investment now accounts for about 32 percent of functional capital expenditures in 2025, the largest share among other spending categories (Graph 3).

Graph 3: EEI Projected Functional Capital Expenditures 2015-2025

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As utilities confront the challenges of reliability and affordability, attention is shifting to containing costs. One path forward is through innovative grid technologies (IGTs), or grid-enhancing technologies (GETs), which include both software and hardware solutions. These technologies optimize existing infrastructure by boosting network capacity and reducing losses, lowering investment needs, speeding connection queues, and accelerating renewable integration.

A brief by the Energy Transitions Commission, a global coalition focused on accelerating the net-zero transition, estimates that wider adoption of innovative grid technologies in the United States could defer an estimated US$5 billion to US$35 billion in transmission and distribution costs over the next five years.

“Incorporating new technologies that improve the efficiency of existing infrastructure can moderate cost increases by deferring investment on capacity upgrades or expansion”, said Likeleli Seitlheko, Economist at TD Economics.

As utilities explore these options, technology firms are moving to turn theory into operational savings. Corinex, for example, develops solutions that help utilities improve the efficiency of their current energy infrastructure. Its grid flexibility solution, built on broadband-over-powerline technology, boosts local grid capacity by at least 35 percent, eases grid strain, defers costly grid upgrades, and enables flexible energy management. Such innovations show how digital tools can make modernization more affordable and lay the groundwork for a cleaner energy system.

Yet even as digital innovation accelerates, renewable investment has begun to lose momentum. This raise concerns that slowing progress could prolong reliance on costly fossil fuels and keep household electricity prices high.

Renewables Lose Momentum Amid Policy Uncertainty

U.S. clean energy investment is losing steam (Graph 4). In August 2025, the U.S. government canceled US$679 million in federal funding for a dozen offshore wind projects, part of a broader retrenchment that has wiped out nearly US$19 billion in renewable developments this year. That compares with just US$827 million cancellations in 2024, underscoring how policy shifts are cooling one of the country’s fastest-growing industries.

Graph 4: Total Value of U.S. Cleantech Investments Announced

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The pullback may reflect growing skepticism among policymakers and investors about how quickly renewables can lower costs given the nation’s slow pace of modernization. A 2024 report from Berkeley Lab shows nearly 2,600 gigawatts of energy and storage capacity (Graph 5), almost twice the size of the existing U.S. power grid, waiting in interconnection approval queues. Without major upgrades to the current transmission and distribution systems, much of that capacity will remain stranded.

Graph 5: Total Capacity in U.S. Interconnection Queues

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*Source:* *Lawrence Berkeley National Laboratory - Energy Markets & Planning (EMP)*

The project backlog is feeding hesitation in Washington. With projects piling up and grid upgrades lagging, policymakers are increasingly wary of funding developments the system cannot yet handle. However, with investor-owned utilities planning more than US$1.1 trillion in grid investments over the next five years, now is the time to align infrastructure spending with renewable integration. Deferring projects risks higher costs and a less flexible grid for the future.

Industry analysts warn that the pullback threatens one of the cheapest and fastest sources of new energy generation. “Renewables can be built and connected in a matter of a year or two, in a way that meets data center developers’ timelines,” said Advait Arun, an energy policy analyst at the Center for Public Enterprise. “If you’re ignoring renewables, then you’re missing a key part of the equation.”

The levelized cost of electricity (LCOE) for renewables, which measures lifetime costs divided by energy production, is lower than that of fossil fuels such as coal, natural gas, and petroleum (Graph 6). Still, fossil fuels supplied more than 60 percent of U.S. electricity in 2023, underscoring the potential savings from a cleaner mix.

Graph 6: Levelized Cost of Electricity (LCOE) for Major Energy Sources in the U.S.

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After years of flat consumption, U.S. electricity demand is climbing again. The U.S. Energy Information Administration projects electricity use to grow at an average annual rate of 1.7 percent from 2020 through 2026, compared with an average annual rate of 0.1 percent from 2005 to 2020 (Graph 7). The surge reflects rising demand from data centers, electric vehicles, and advanced manufacturing – signaling a structural shift in how power is produced and consumed.

Graph 7: U.S. Electricity Consumption Trends and Forecast

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*Source:* *U.S. Energy Information Administration*

With electricity demand surging, renewables are increasingly seen as essential to meeting growth without deepening reliance on costly fossil fuels. “If we take renewables off the table, we are going to have a real power shortage problem in this country”, said John Ketchun, CEO of NextEra Energy. Yet the ability of renewables to meet this demand will depend on how effectively utilities modernize and digitalize their networks. Expanding capacity alone will not be enough: the grid must become more smart, flexible, and capable of managing a growing mix of intermittent and localized generation.

Meeting that challenge will require technologies that give utilities greater visibility and control across their networks. Solutions already being deployed, including those developed by Corinex, show how digital systems and data-driven management can optimize existing distribution grids. By enhancing local capacity and operational efficiency, such tools allow utilities to handle higher levels of renewable generation and rising demand without immediately resorting to large-scale infrastructure expansion.

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Powering the Next Chapter

America’s power challenge is no longer just about reliability, but about achieving sustainability and keeping costs under control. Rising demand from new industries has exposed the limits of an aging grid and the urgent need for a smart and flexible energy infrastructure.

The next few years will be decisive. Utilities and policymakers must align grid modernization with renewable integration to expand supply while holding down costs. Technologies that improve efficiency and visibility across networks help meet growing demand while containing expenses.

Coordinating these efforts could stabilize prices, reduce dependence on fossil fuels, and strengthen long-term energy security. How the United States manages this balance will define the next chapter of its energy transition.