Executive Summary
The cost of delivering power in the U.S. has increased and shows no signs of reversing.
Since 2020, residential electricity prices in the U.S. have increased 32%, adding approximately $35 to the average monthly bill. For low- and middle-income families, electricity now accounts for 6%–10% of household income.
Consumption hasn’t changed. Costs have.
So, what’s driving up electricity prices?
There isn’t a single cause behind the rise. Instead, several pressures have converged.
Utilities operate within a largely fixed-cost environment. Most cost drivers are either market-determined or contractually committed. Leadership has limited ability to influence them.
But one driver is different. And it is the one that utility leadership can directly control.
This paper presents a structured analysis of the three forces driving up electricity prices and the single controllable cost driver that utility executives can act on today.
What’s Inside
- Principal drivers of electricity price inflation
- Three forward procurement levers to cut ratepayer costs
- Aligning strategies with regulatory requirements
For leaders navigating cost pressure, this decision protects ratepayers as well as gives utilities a defensible case with regulators.
Read the paper.
Also Read – GEP Outlook 2026 Procurement & Supply Chain
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FAQs
The 32% rise in U.S. residential electricity prices since 2020 is driven mainly by fuel price volatility, aging infrastructure, and structural market costs. Natural gas price spikes affect generation costs as gas supplies about 43% of U.S. electricity, while grid modernization requires significant capital investment in aging transmission and distribution assets. Capacity market pressures and regulated returns further increase costs that are passed through to consumers.
Utilities can commit to critical equipment earlier, aggregate demand across multi-year capital programs, and build long-term supplier partnerships. Forward purchase commitments and slot reservations secure manufacturing capacity before shortages emerge. Strategic supplier alliances and consolidated demand also strengthen negotiating power and reduce volatility in supply chain costs.
Strategic procurement reduces electricity costs by removing the “scarcity premium” utilities often pay in constrained supply markets. When utilities secure equipment early, aggregate demand across projects, and use indexed contracts, they stabilize supply costs and avoid emergency purchasing at inflated prices. These disciplined buying practices help control capital and operating costs, which ultimately flow into the rates households pay.