Energy Musings - November 24, 2025

Affordability is the topic du jour. An affordability component is the price of electricity. Multiple factors impact electricity prices, however, determining the most important is the challenge.

Searching For Affordability In All The Wrong Places

Affordability has suddenly become the issue of the day. Politicians, energy regulators, analysts, and mostly the public are talking about how nothing seems affordable. The cost of living for families is composed of many items, but several are crucial – food and energy. You can do without many things, or make do with what you have, but it is impossible to survive without food and energy.

While President Donald Trump has inflated the cost of living through his tariff policy, it has begun to pay dividends in the flow of capital into the U.S., which is the purpose of his strategy. While many people focus on the investment promises Trump has gained from foreign companies while globe-trotting, we were intrigued by an article in The Wall Street Journal discussing actions by GE Appliances. The company has just awarded $150 million in contracts to American suppliers for steel, resins, parts, and components used to make washers and combination washer-and-dryer machines. The machines will be manufactured in a renovated factory in Louisville, Kentucky. China’s Haier Smart Home owns GE Appliances, and contracts are being awarded to suppliers across 10 states.

Growing up, our hometown was home to numerous GE executives. Several of their children were high school classmates. Later, in graduate school, a union official for GE’s appliance business in Kentucky was a classmate. He would tell us of the wondrous labor force he represented and the high quality of their output. Will GE Appliances’ move mean cheaper appliances? We don’t know, but we can say with confidence that we are slowly reviving the nation’s manufacturing industry and workforce, which are crucial to ensuring the U.S. remains a global economic powerhouse.

During the New Jersey governor’s race earlier this month, affordability was a central issue. A key issue was the state’s high electricity prices. But it wasn’t just in New Jersey that the high cost of utilities has become a burning social and political issue. In Massachusetts and Connecticut, the respective governors have called for their regulators and legislatures to examine the high power costs and seek ways to reduce consumer bills.

The latest news in a neighboring state is that Rhode Island Energy withdrew a plan to provide roughly $25 in bill credits per month for January, February, and March 2026 and 2027 to electricity customers amid criticism that the relief was inadequate. There were to be larger bill credits for natural gas consumers who use the fuel for home heating. The utility offered the plan as part of a settlement in a lawsuit over its acquisition of the local power company. Rhode Island’s governor approved the plan, but it was sunk by the opposition from the state’s attorney general. The last chapter of this relief saga has yet to be written.

What was enlightening was reading public comments about the issue posted to articles on local television station websites. We are not being critical of the comments, but they often reflect a lack of understanding of how electricity operates. That lack of knowledge explains why people do not understand what factors have the most impact on their electricity bills.

For example, one reader wrote, “It’s criminal how they can jack up the prices every year right before winter (when everyone knows heat gets used more) and we have to sit there and take it.”

The state mandates that electric utilities adjust consumer bills twice a year to reflect seasonal differences in fuel costs for the generators that provide electricity. Winter prices are set for October to March, and summer rates are for April to September. Fuel costs, especially for natural gas, which supplies nearly 55% of Rhode Island’s power, are higher during the winter when large volumes of gas are used to generate electricity and are diverted to home heating. This forces the utility to purchase more expensive liquefied natural gas and often to use fuel oil and coal to run older power plants. Notably, state law prohibits the utility from profiting from the cost of the fuels it purchases.

Another reader commented, “Maybe they should just remove the delivery fee considering that is more expensive than the actual cost of what I use!!!”

Generating power doesn’t do the customer any good if it can’t be brought to their home or business. That is what all those power poles, wires, and transformers are about. It costs money to maintain that equipment, and as the utility adds new generating plants, new transmission wires must be built to move the electricity.

A third reader may have come closer to identifying a significant cost driver for higher electricity prices in Rhode Island and other states, when he wrote, “Get rid of the useless ‘Green Energy Taxes’ and the bills will do wayyyy down, instead of paying twice for ‘usage,’ ‘supply,’ and ‘delivery’… it’s a joke!”

Jonathon Lesser, Senior Fellow at the National Center for Energy Analytics, where we are also a Senior Fellow, has a new paper out on electricity cost issues. What’s Driving Higher Retail Electric Rates? Lesser concludes that “There is no single factor that can explain all the increases in all electric utilities’ retail electric rates over the past few years. The rates retail customers pay for electricity depend on numerous factors, some of which are market-based, while others are specific to individual state regulators. There is no doubt, however, that the loss of dispatchable generating capacity is contributing to higher electric rates.”

Lesser is right that many factors affect electricity prices, and critics need to examine them to develop strategies to help customers.

A research report by Lisa Lenowes for the Fiscal Alliance Foundation, titled Massachusetts Electricity Costs: The Real Source of the Problem, examines the state’s power bills and the causes of their significant increase. She notes that electricity prices in Massachusetts have increased faster over the past decade than the overall inflation rate. “While ratepayers often blame utilities like Eversource (NSTAR) and National Grid, the primary cause lies in state policy—not utility management,” she concludes.

Linowes showed that the average monthly residential bill for customers in Eastern Massachusetts rose from $113 to $204 between 2014 and 2025. However, the portion of the total bill devoted to climate and energy mandates jumped from $15 to $59. The policy surcharges come from programs such as the Renewable Portfolio Standard (RPS), the Regional Greenhouse Gas Initiative (RGGI), solar, and energy efficiency. Ratepayers are paying over $4 billion annually for these programs; however, the state cannot show a linkage between the policies and a reduction in the state’s carbon emissions.

The conclusion Linowes reaches is that “Most of New England’s emission declines have come from coal retirements, natural gas efficiency, federal rules, and weather, not from Massachusetts’ retail programs.” Her conclusion is similar to that reached by examinations of bills in other states, especially regarding the Regional Greenhouse Gas Initiative, a cap-and-trade program to reduce carbon emissions. Utilities within the member states are required to reduce their emissions or buy carbon credits as offsets. New Jersey has been in and out of the program, but is back in. The Republican gubernatorial candidate proposed withdrawing from it to lower electricity bills. Virginia has been in a political fight over withdrawing, but with a Democrat governor, it will likely remain. Pennsylvania’s legislature recently voted to exit the program to address its budgetary problems.

In Linowes’ report, she created a table showing the components of residential electricity bills in Eastern Massachusetts from 2015 to 2025. Energy supply, distribution, and transmission are the three components that make up the cost of generating and delivering electricity to customers. The table shows that the price of the RPS and RGGI programs, and the policy costs, totaled $15 a month in 2015 and are now costing customers $59 a month. What is notable is how these two particular expense categories march steadily higher year by year.

Government policies drive up electricity bills.

There are barely enough fingers to point at the possible reasons for rising electricity prices. It is due to the limitation and removal of renewable energy subsidies under the One Big Beautiful Bill Act (OBBBA), claims some. Blame the surge in power loads because all those tech companies are building massive data centers that gulp energy. It’s the greedy utilities that want to make more profits, so they are spending on capital investments, which is how they make money.

Electricity rate requests rose after COVID-19, driving prices up.

In recent weeks, the Energy Bad Boys newsletter has been digging into rising electricity prices. They have invested extensive time in reading the largest rate cases filed by major utilities. Their analysis began to identify what was behind the jump in the amount of the electric rate increases requested and the rate approvals played, and how they drove the acceleration of electricity price increases. The conclusions from their two recent weekly newsletters offer interesting perspectives on the issue. Part two of their analysis of rising electricity costs concluded:

“That was a lot, but we wanted to make perfectly clear that out of control spending to facilitate clean energy mandates and the integration of wind and solar onto the grid were primary reasons for the rise in electricity rates—not OBBBA. Other reasons exist, but these are the primary ones found in most of the rate cases we looked at.” (November 22)

In that issue, the two researchers pointed out that several utilities seeking rate increases continue to use subsidies for renewable energy projects initiated under the Inflation Reduction Act. Based on data from rate cases for the largest rate increases filed in 2025, it is clear that many utilities are building clean energy projects to capitalize on regulatory returns and the renewable investment tax credits.

Arizona Public Service is building the $264 million Agave Battery Energy Storage System. Florida Power & Light is spending $624 million on solar and battery storage projects. DTE is investing in the Trenton Channel Battery Storage facility. Con Edison, in New York, is lobbying to be allowed to own renewable energy projects under the guise that the state needs an “all-hands-on-deck” approach to meeting New York’s carbon-emissions-reduction target.

The Energy Bad Boys noted that it is all about capital investments driving up electricity prices. The issue is why and what regulators can do about it.

“While transmission and distribution charges as a share of overall capital costs have risen slightly, the surge in spending on wind, solar, and battery storage will soon account for 19 percent of all capital costs. If utility commissioners are worried about rising prices, the best place to start clipping capex plans is probably the generation resources that only show up if the weather cooperates.”

Their conclusion is correct if we are interested in slowing the rise in electricity prices and ensuring customers have a reliable energy system. It is not a popular message among climate activists or those promoting clean energy projects. However, it is the right option for consumers. The alternative is constantly rising electricity prices. They will squeeze consumer budgets and force governments to begin socializing electricity bills.