It’s not your imagination. Power bills are going up. Way up.
Whether you live in California, Texas, New York, or Florida, you’ve probably noticed it. And no, it’s not just because you’re running the air conditioning more or charging your electric car. There’s something deeper happening in the way electricity is bought, sold, and paid for in the United States.
The real story is this: powerful utility companies are quietly changing the rules of the game to protect their profits. And we’re paying the price.
In many parts of the country, electricity is sold by investor-owned utilities, or IOUs for short. These are for-profit companies like Pacific Gas & Electric in California, Florida Power & Light in the Southeast, or Con Edison in New York. They are private businesses, but they don’t compete with each other the way grocery stores or phone companies do. Instead, they each have a legal monopoly over the regions they serve.
That’s right. Most ratepayers in the U.S. don’t get to choose who powers their home.
These companies are regulated by state agencies like the California Public Utilities Commission or the New York Public Service Commission. The idea is that since they have no competition, someone needs to make sure they don’t take advantage of customers. But critics say these agencies are often too cozy with the companies they’re supposed to oversee and regulate.
Utilities say prices are rising because demand is rising. More people are buying electric cars. More homes are using electric heat instead of gas. And massive data centers that run AI and cloud computing are gobbling up electricity at a record pace.
There’s some truth to that. But it’s not the whole story.
These companies also make more money when they build more things, like power lines, substations, and gas plants, because they’re allowed to earn a guaranteed profit on every dollar they spend on infrastructure.
That means the more they build, the more they earn, even if what they’re building isn’t necessary or could be done more cheaply. Some call this a “build-to-profit” business model.
In San Diego, for example, residents now pay some of the highest electric rates in the country. San Diego Gas & Electric made more than $900 million in profit in 2023 alone. Meanwhile, the average customer there pays more than 47 cents per kilowatt hour during peak hours. That’s more than double the national average.
Florida Power & Light, another IOU, has raised rates multiple times in recent years and spent millions lobbying state lawmakers. In 2022, it was caught secretly funding fake candidates in state senate races to weaken support for solar policy.
And in New York, Con Edison has proposed a plan that would raise the average customer’s electricity bill by more than 12 percent by 2025. Why? Mostly to cover the cost of new investments—investments that help them earn more profit.
Is This Legal?
Technically, yes. The rules allow utilities to earn a return, usually around 9 or 10 percent, on their investments. That’s supposed to encourage them to keep the grid in good shape.
But what happens when that incentive goes too far?
What if utilities push for big, expensive projects even when smaller, cheaper, cleaner options are available—like rooftop solar, energy storage, or efficiency upgrades?
That’s what many clean energy advocates say is happening. And because these costs get passed down to customers, it means we all end up paying for choices based on maximizing profits for investors, not reliability or affordability for residents.
Not all utilities are built the same.
Some cities and regions have public utilities called municipalities or publicly-owned utilities (POUs). These are owned by local governments and run without a profit motive. The Los Angeles Department of Water and Power (LADWP) and Sacramento’s SMUD are two examples. In Nebraska, the entire state is powered by POUs.
POUs tend to have lower rates and invest more in clean energy. They don’t have to worry about profits and keeping shareholders happy. Their focus is supposed to be on reliability and affordability.
That’s not to say POUs are perfect, when they raise rates, there’s usually more transparency and more public input. Technically, the ratepayers are the owners of the utility.
If you’ve been following the news, you may have heard that rooftop solar customers are now being blamed for driving up, or subsidizing non-solar customers. Big IOUs claim that households with solar panels use less electricity, so they’re not paying their “fair share” for maintaining the grid, although most solar customers pay a fixed monthly rate to have access to the grid, unless they defect and are completely off the grid.
Utilities call this the “cost shift.”
But many experts and economists have concluded this claim is wildly exaggerated.
Multiple independent studies, including from Lawrence Berkeley National Lab, the Institute for Local Self-Reliance, and M.Cubed, have found that solar customers actually save the grid money by reducing the need for expensive new power plants and lowering stress during peak demand. In California, rooftop solar helped avoid over $1.5 billion in costs in 2022 alone.
So why are IOUs, Big Oil and even the Chamber of Commerce pushing the cost-shift story so hard and attacking climate regulations?
Because rooftop solar is a threat to their business model. Every time a home goes solar, the utility loses a customer. Not entirely, but enough to make them nervous. And if too many customers go solar, utilities can’t count on the same steady profits from building large power plants or long transmission lines.
That’s why we’re seeing attacks on solar in states like California, Florida, and North Carolina. In California, regulators recently slashed the value of net metering—the policy that pays solar users for the extra electricity they send back to the grid. The result? Solar installations dropped by 70 percent in less than a year, and thousands of jobs were lost.
There’s no doubt the grid needs to grow. We’ll need more electricity to power cars, homes, and industry as we shift away from fossil fuels.
But clean energy advocates argue that utilities are using this moment to lock in expensive projects that benefit their bottom line, not the public good.
Take Dominion Energy in Virginia. The company pushed through a $10 billion offshore wind project while blocking community solar programs that would allow low-income residents to share in the clean energy transition expeditiously. In Georgia, Southern Company spent more than $35 billion on two new nuclear reactors at the Vogtle Generating Plant that went years over schedule and billions over budget, all while resisting rooftop solar that could have been deployed in weeks or months.
In Texas, the state’s deregulated market left customers exposed to wild price swings during the deadly 2021 winter storm. Some people received bills for thousands of dollars after the power came back on. The utilities? They made a fortune.
The lesson here is simple. When utilities are allowed to call the shots, their interests don’t line up with customers.
We need a new approach. One that puts people, not profits, at the center of our energy system. Energy democracy and energy as a human right.
That starts with fixing how utilities make money. Instead of rewarding them each time they find a way to build expensive infrastructure they can profit from, we should enable regulators to incentivize cutting emissions, affordable rates, and delivering reliable service. And if the private sector simply cannot deliver, we must municipalize those entities and ensure people have access to clean, safe and reliable energy.
We should also invest in better solutions, like virtual power plants, rooftop solar, battery storage, demand response and energy efficiency, that help homes and businesses produce and manage their own energy. These tools make the grid more resilient, especially during extreme weather, and they often cost less than giant power plants or new transmission lines.
And we need stronger and meaningful public oversight. That means utility commissions that listen to regular people, not just lobbyists. It means policies that protect low-income families from unfair rate hikes. And it means holding utilities accountable when they make mistakes or put profits before safety and reliability.
We don’t have to keep accepting false solutions from companies that see climate chaos as just another business opportunity.
We can build something better. Cleaner. Smarter. Fairer.
But we must demand it.
Otherwise, we’ll keep paying more—for less.