2026 Electric Rate Hikes: Why Bills Are Rising and What to Do

The Short Answer

Residential electricity really is getting more expensive. The U.S. Energy Information Administration reports that the average residential price in July 2026 was 18.31 cents per kWh, up 4.9% from a year earlier. Its October 2026 Short-Term Energy Outlook puts the 2026 average at 18.2 cents per kWh, up from 17.3 cents in 2025, with a further rise expected in 2027.

You can’t change the rate, but you can check you are on the right plan, shop for supply if your state allows it, and cut the few loads that make up most of the bill. If paying is the problem, there is help.

Why Prices Are Rising

Fuel is part of it, but the bigger story is the grid. EIA expected increases in electricity prices to outpace inflation through 2026, as utilities have increased capital investment to replace or upgrade aging generation and delivery infrastructure. It adds that utility spending on electricity distribution has surpassed spending on electricity transmission and production.

Lawrence Berkeley National Laboratory’s 2026 review of retail prices found that investor-owned utilities’ total distribution spending grew at an average 5% a year from 2019 to 2025 after inflation, and identified 22 states where distribution costs pushed retail prices up from 2024 to 2025. On data centers it is more cautious: load growth can increase or decrease retail prices, depending on whether existing grid assets can be used more fully.

The practical upshot: the delivery part of your bill, which you can’t shop around, is a growing share of it.

Step 1: Read Your Bill and Your Rate Plan

Split supply from delivery. Most bills show a supply or generation charge (the electricity itself) and a delivery or distribution charge (the wires), plus fixed customer charges and taxes. Only the supply part can be shopped, and only in some states.
Find your rate schedule. Your utility’s website lists the residential rates it offers. Many now offer time-of-use plans. EIA explains that demand is usually highest in the afternoon and early evening (peak hours), and some utilities price those hours higher to encourage conservation.
Be realistic about time-of-use. It pays only if you can move big loads such as laundry, dishwashing, EV charging or pool pumps out of the peak. In a large Sacramento trial, customers on time-of-use cut peak use noticeably, but the average bill savings were small, around 2 to 3%. Use your utility’s rate comparison tool with your own usage before switching.

Step 2: Shop for Supply, Carefully (Deregulated States Only)

In states with retail choice, such as Pennsylvania, Ohio, New York, Maryland, New Jersey, Illinois and Texas, you can buy supply from a competitive company. The Pennsylvania PUC’s rule is simple: for you to save, the EGS’s price must be lower than your present provider’s price to compare. The price to compare is printed on your bill.

Questions the Pennsylvania and Ohio regulators tell you to ask before signing:

Is there an introductory rate, and how long does it last?
If there is a variable rate, is there a limit to how high or low the variable rate can go?
Is there a fee if I cancel the contract early?
What happens when the contract ends? In Pennsylvania a supplier can convert the contract to a month-to-month variable rate (or a new fixed rate) if you do nothing, so put the end date in your calendar.

Community solar is another option in some states. You subscribe to a share of a local solar project and, according to the Department of Energy, the credit is typically applied directly to a subscriber’s monthly electric bill. DOE’s consumer-protection guidance calls for programs to deliver at least 20% household savings, but that is a recommendation, not a guarantee: read the contract terms and cancellation fees.

Step 3: Cut the Loads That Matter

A higher price per kWh makes every kWh you avoid worth more. Start with the biggest users, which in most homes are heating, cooling and water heating.

Heating and cooling. ENERGY STAR says certified smart thermostats save approximately 8% of heating and cooling bills or $50 per year on average. Sealing air leaks and topping up attic insulation does more; the EPA puts the average saving at 15% of heating and cooling costs.
Find out where the power goes. A whole-home energy monitor on your panel shows usage by circuit, so you can see whether it is the water heater, a second fridge or something running all night. See our energy monitor comparison.
Check for a sudden jump. If your kWh went up and your habits didn’t change, something may be failing. Our guide to an electric bill that doubled walks through the usual causes.

Step 4: If You Are Struggling to Pay

LIHEAP. The federal Low Income Home Energy Assistance Program helps low-income households with their home energy bills. Apply through your state or local agency.
Budget billing. Spreads your annual cost into equal monthly payments. The New York PSC is clear that it does not reduce your overall energy bill for the year, but it does make big winter or summer bills manageable.
Utility assistance and payment plans. Call before you fall behind. Most utilities have arrangements and hardship programs that are easier to get before a shutoff notice.

Tools That Help

We may earn a commission if you buy through these links, at no extra cost to you. Products are chosen on published specifications; we do not test them in-house (how we choose).

ecobee Smart Thermostat Premium

ENERGY STAR certified. Schedules and remote sensors so you heat and cool the rooms you use.

Check price on Amazon

Emporia Vue 3 Home Energy Monitor

Circuit-level monitoring for your panel, so you can see which loads drive the bill.

Check price on Amazon

Free: Home Energy Audit Checklist (PDF)

A two-page, room-by-room checklist for finding air leaks, standby power and heating and cooling waste yourself, in the order that pays back fastest. Get it now, plus new fix guides by email. Unsubscribe any time.

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Frequently Asked Questions

Are electricity rates going up in 2026?

Yes. EIA reports the average residential price in July 2026 was 18.31 cents per kWh, up 4.9% from a year earlier, and its October 2026 outlook expects a 2026 average of 18.2 cents per kWh, up from 17.3 cents in 2025.

Why are electric bills rising?

EIA points to utility investment to replace or upgrade aging generation and delivery infrastructure; distribution spending now exceeds spending on transmission and production. LBNL found distribution costs pushed prices up in 22 states from 2024 to 2025.

Will a time-of-use plan lower my bill?

Only if you can move large loads out of peak hours. In a large DOE-documented trial, customers cut peak use but average bill savings were only a few percent.

Should I switch electricity suppliers?

In choice states, only if the supplier's price is below your utility's price to compare, and check the introductory period, variable-rate limits, cancellation fees and what happens when the contract ends.

Does budget billing save money?

No. It evens out payments across the year but does not reduce the total you pay.

Related Guides

Electric bill doubled? — when usage is the problem
How much smart thermostats save — what the data says
Best home energy monitors — see where the kWh go
Why is my electric bill so high in winter? — seasonal causes

2026 Electric Rate Hikes: Why Your Bill Is Rising and What You Can Do