Electricity prices are surging. The GOP megabill could push them higher.

Power infrastructure under construction for Meta’s Eagle Mountain Data Center in Utah, Nov. 19, 2024. Electricity demand is surging for the first time in decades, partly because of data centers needed for A.I., and power companies are already struggling to keep up. (Christie Hemm Klok/The New York Times)

By Brad Plumer and Rebecca F. Elliott

The cost of electricity is rising across the country, forcing Americans to pay more on their monthly bills and squeezing manufacturers and small businesses that rely on cheap power.

And some of President Donald Trump’s policies risk making things worse, despite his promises to slash energy prices, companies and researchers say.

This week, the Senate is taking up Trump’s sweeping domestic policy bill, which has already passed the House. In its current form, that bill would abruptly end most of the Biden-era federal tax credits for low-carbon sources of electricity like wind, solar, batteries and geothermal power.

Repealing those credits could increase the average family’s energy bill by as much as $400 per year within a decade, according to several studies published this year.

The studies rely on similar reasoning: Electricity demand is surging for the first time in decades, partly because of data centers needed for artificial intelligence, and power companies are already struggling to keep up. Ending tax breaks for solar panels, wind turbines and batteries would make them more expensive and less plentiful, increasing demand for energy from power plants that burn natural gas.

That could push up the price of gas, which currently generates 43% of America’s electricity.

On top of that, the Trump administration’s efforts to sell more gas overseas could further hike prices, while Trump’s new tariffs on steel, aluminum and other materials would raise the cost of transmission lines and other electrical equipment.

These cascading events could lead to further painful increases in electric bills.

“There’s a lot of concern about some pretty big price spikes,” said Rich Powell, CEO of the Clean Energy Buyers Association, which represents companies that have committed to buying renewable energy, including General Motors, Honda, Intel and Microsoft.

A study commissioned by the association found that repealing the clean electricity credits could cause power prices to surge more than 13% in states like Arizona, Kansas, New Jersey and North Carolina and lead to thousands of job losses nationwide by 2032.

Trump administration officials, along with many in the gas industry, disagree. They argue that Trump’s efforts to make it easier and cheaper to drill and to build pipelines will lower electricity prices over the long term. They also say wind and solar power technologies have already received subsidies for decades and that expanding them too rapidly risks making the electric grid less reliable.

“President Trump’s agenda is to lower the cost of oil production in the United States, lower the cost of natural gas production in the United States — that ultimately will lead to lower average prices and at the same time profitability for businesses,” said Ben Dietderich, an Energy Department spokesperson.

He added that “prices are going to move up and down in the short term,” but that the administration was focused on policies “that will deliver long-lasting prosperity.”

While government forecasters expect electricity prices to rise quickly over the next two years, they predict gasoline prices for cars will fall, offsetting some household costs. Oil prices have already declined nearly 20% since Trump took office, partly because of concerns that his tariffs could slow global economic growth.

Still, the threat of rising electricity bills has made some lawmakers nervous about scrapping federal support for clean energy.

“Given rising energy demand, it is imperative that any modifications to the tax code avoid worsening the economic pressures that American households and businesses already face,” Sen. Lisa Murkowski, R-Alaska, wrote in a letter with three fellow Republicans in April. Repealing some tax breaks “would translate into immediate utility bill increases, placing additional strain on hardworking Americans,” they wrote.

Why Electricity Prices Have Been Rising

Since 2022, U.S. residential electricity prices have risen 13% on average, outpacing inflation, according to the Energy Information Administration. In New England, the mid-Atlantic and the West Coast, prices are increasing even faster.

The shocks are also being felt in places like Ohio, where this month rates are rising 26%, on average — hundreds of dollars more per year for many families — as energy-hungry data centers flood the state.

The causes of rising rates are complex. In California, utilities face soaring costs from worsening wildfires. Elsewhere, power companies are spending tens of billions of dollars to upgrade aging electric grids and prepare for weather disasters, electric vehicles and growing amounts of renewable energy. Transmission and distribution costs have been soaring and now make up nearly 40% of power bills.

One big driver has been fluctuating natural gas prices. After Russia invaded Ukraine in 2022, gas prices spiked and so did electricity bills. While gas prices fell to record lows last year, they are expected to nearly double this year and climb further in 2026, as demand rises at home and the U.S. sells more of its gas abroad.

The United States already exports roughly 11% of its gas in the form of liquefied natural gas, or LNG, much of it to European and Asian countries willing to pay a premium. U.S. export capacity is set to nearly double by 2028 while tech companies are demanding ever more gas power for data centers.

“LNG was already a tidal wave of demand and now you’ve just got on top of it these other forces,” said Gordon Huddleston, president and partner of Dallas-based Aethon Energy, one of the largest privately-held gas producers in the country. “Every real estate guy in Dallas is running around developing a data center.”

On top of that, the cost of building gas power plants has nearly tripled since 2022, and power companies now face wait times of five years or more for new gas turbines. Tariffs are also making it more expensive to drill for natural gas by raising the cost of equipment such as steel pipe.

The crunch comes as the Trump administration wants to end the Low Income Home Energy Assistance Program, a $4 billion federal fund that helps 6.2 million people from Texas to Maine pay for high heating and cooling bills. The White House called the program “unnecessary,” and said families would be helped by policies that lowered energy prices.

“We’ve got millions of families that are already struggling to pay their bills,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association. “Now you bring in extreme temperatures, record heat, and it’s a very bad situation.”