Why Your Electric Bill Keeps Rising—And What the Usual Explanations Miss
For years, I’ve watched the debate over rising retail electric rates drift further from the underlying realities of how our power system works. Depending on who you ask, the culprits are data centers, utility regulation, subsidies, or corporate greed. Each explanation contains a sliver of truth—but none of them, taken alone, explains what has actually driven electricity prices higher across much of the country.
In my latest issue brief for the National Center for Energy Analytics, I step back and examine the data. What emerges is a far clearer—and far more troubling—picture: the steady replacement of dependable, dispatchable power plants with intermittent wind and solar resources is the primary force pushing retail electricity rates upward.
Since 2010, total U.S. generating capacity has increased slightly. Yet the type of capacity we rely on has changed dramatically. We have retired more than 80 gigawatts of coal, natural gas, and nuclear plants, the very facilities that provide electricity when it is needed—not when the weather cooperates. In their place, we have added large quantities of wind and solar, along with only modest amounts of battery storage.
This transition is about to accelerate. Between 2025 and 2026 alone, more than 20,000 megawatts of dispatchable generation will shut down, overwhelmingly replaced by intermittent sources supported by a thin margin of storage. The result is a system increasingly exposed to weather volatility and less able to guarantee supply at the moments it matters most.
Markets are already sounding the alarm. In PJM—the nation’s largest wholesale electricity market—capacity prices have climbed nearly tenfold year-over-year as dispatchable supply tightens. Those costs will flow directly to consumers, regardless of whether they understand the forces behind them.
Compounding the problem is the continued distortion of wholesale markets by federal subsidies such as the Production Tax Credit. These subsidies allow wind and solar generators to bid electricity at negative prices, undermining the economics of reliable thermal plants and accelerating their retirement. It is a textbook case of what I call Gresham’s Law of Green Energy: subsidized resources drive out the resources we actually need.
The grid is also becoming more complex and costly to maintain. As intermittent generation grows, utilities must procure additional reliability services—frequency control, voltage support, spinning reserves—to stabilize a system that previously relied on the inherent characteristics of traditional power plants. These costs are real, even if they rarely make headlines.
You cannot remove tens of thousands of megawatts of dependable generation, replace it with weather-dependent resources, and expect electricity rates to stay low or reliability to stay high. Yet that is precisely the path many states are on, driven by policies that mandate specific outcomes while ignoring the engineering and economic realities required to achieve them.
Wind, solar, and batteries have roles to play in our energy mix. But they cannot replace the foundational importance of dispatchable power. Until policymakers accept that fact, consumers will continue facing higher costs for a less reliable system.
For a full, data-driven analysis of what is truly driving higher retail electric rates, I encourage you to read the complete issue brief: https://energyanalytics.org/electric-rates/.