Americans Face Another Blow as High Temperatures Cause Surging Costs

Due to various factors, some states might see a 50% rise in electricity bills next year – and not many can afford that.

Too Hot to Handle

In what has been a record year for rising temperatures, millions of Americans continue to battle scorching heatwaves.

But for many who are struggling to access or afford proper cooling methods, like air conditioning, the struggle is turning into a fight for survival.

Costs Going Up

And then there are the increases.

According to a USA Today investigation of US Energy Information Administration forecasts, a 17% surge in electricity bills (compared to 2021) is expected, with the average bill for June – August reaching about $173.

2025 = An Expensive Year?

That means that higher electricity prices could hit over 65 million Americans next year.

The reasons? A decrease in energy supply and a growth in demand on the largest electric grid in the United States, among other factors, as more and more people are relying on A/C.

Too Many Users

This escalation happens as the network moves to control an excess of capacity just as Virginia increases its power demand to support its data centers and AI.

Shutting down coal- and natural gas plants will also eliminate about 4 gigawatts of generating capacity from the grid, which is sufficient to power approximately 3.2 million homes.

Blame Climate Change… Again

Speaking to USA Today, climate scientists say human-caused climate change is still the major reason for rising temperatures.

And if it keeps getting hotter (as it has for the past year), those bills could skyrocket.

High Heat = High Costs

As the Energy Information Administration stated in an analysis paper: “If temperatures end up much hotter than expected, households are likely to face higher electricity bills, especially in the southern states.”

What’s Pushing the Prices?

Natural gas prices spiked considerably during the COVID-19 pandemic, which is why energy prices are so much higher than before 2022.

And don’t forget about the Russia-Ukraine war which further increased the pricing situation as shipments to Europe shot up to meet the demands that were previously met by Russian gas.

Guess Who’s Paying?

As electricity demand rises, renewable energy becomes more widespread, and wildfires and storms also increase, utilities are making investments to enhance the electric grid.

And the costs? Those are simply passed along to customers.

Evil Inflation

Although the rise of energy prices mostly stayed below the inflation rate for the last decade, the growing demand for natural gas, which began in early 2022, led to electricity costs shooting up, increasing by 10% in 2022 and 6% in 2023.

Worsening Weather

Experts also say that the power grid and electricity lines had to be upgraded to endure extreme weather events – including wildfires and hurricanes.

This is also a major reason why the rising costs eventually end up in customers’ electricity bills.

They Won’t Come Down

Although 2024 saw natural gas prices recovering, electricity costs are still higher than they were before 2022.

And as the Energy Information Administration suggests, a return to previous electricity prices is quite unlikely, given that average annual electricity prices rarely decrease, especially in the face of growing transmission- and distribution costs within the sector.

State-Specific Stresses

As per an analysis by USA Today who applied the predicted regional increases to past state retail power data, compared to 2021 only five states in the entire US will likely not experience an increase in their summer bills.

Expect to Pay More

A cost surge exceeding 10% could be seen in as many as 30 states, with the highest increases predicted to hit Florida, Maine, New Hampshire, and Texas.

It’s especially Maine that might see bills shooting up by 50%, thanks to the state’s power lines and grid being upgraded for future storms.

Possible Lower Rates

Some of the states where slight decreases might happen include the Dakotas, Michigan, Utah, and Wyoming.

As per Tyler Hodge, a senior industry economist at the Energy Information Administration: “Since our forecasts represent an average for all the states in that region, some states might have higher relative growth, and some might have lower relative growth.”

Many Unable to Pay

This means that a shocking number of US citizens might lose access to utility services due to too-high bills – which wouldn’t be uncommon.

In 2022, energy utility providers cancelled at least 3 million homes’ electricity due to missed payments.

Bad Timing

More than one-third of these shut-offs occurred during the three summer months, in a year that was one of the hottest ever recorded.

While some customers lost power for only a few hours, others were struggling to scrape enough money together to regain electricity that was switched off for days or even weeks – just to be disconnected again.

Some Are Hit Harder

It’s especially low-income Americans, people of color, families with youngsters, those dependent on electronic medical devices, and residents of substandard housing conditions that experience power cancellations like this.

Studies have also shown that, during COVID-19’s first 12 months, Black- and Hispanic families were respectively three and four times more likely to have no electricity than white households.

How Do They Cope?

The same studies also illustrated that more than 50% of low-income families rely on some form of coping strategy to reduce expenses.

This includes leaving the A/C off during summer when temperatures can reach potentially dangerous levels.

Tough Choices

Some might choose between paying their electricity bills and buying food or medicine.

And others rely on payday loans that fill the gap temporarily, yet in the end drive them further into debt.

A Lightbulb Idea?

Severin Borenstein, an economic analysis and policy professor at the University of California, Berkeley’s Haas School of Business, has an idea to stabilize the rates: using state funds for grid improvements instead of transferring the costs to consumers, especially considering the heavier burden low-income families face because of these hikes.

Only Getting Worse

As Borenstein says: “We’re going to see more of these natural disasters and more investments to reduce the cost of these disasters, and transmission and distribution costs are only expected to go up.”

Not Pessimistic, But…

Ultimately, can the United States wait until more fatal heat waves hit the country before acting to save its households?

Time will soon tell.

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Featured Image Credit: Shutterstock / Tom Wang.