Increasing Energy Costs — and What You Can Do

Do you know why energy bills are on the rise? Did you know they increase disproportionately among Americans? Do you know how your utility rates are regulated and how they are calculated? Do you understand what a public utility commission does? Discover the answers to these and more questions — and decide how you can take action.

Increasing energy costs

Historically, energy rates have risen slowly and moderately, often tied to the rate of inflation. Since 2020, the rate of increase has been faster and more frequent, often exceeding the rate of inflation and with larger rate increases. According to National Public Radio’s “Morning Edition” podcast, electricity prices have hiked 40% since 2020 compared to 26% in overall cost of living. In 2023, one in ten U.S. households spent more than 10% of their income on utilities. Utility costs prove a significant part of the affordability conversation.

These increases disproportionately impact lower-income individuals and families, with one in four low-income households spending more than 15% of their income on utilities. These rate increases can mean making difficult choices between other vital needs like food or healthcare. Lower-income homes also struggle with inefficient appliances and insufficient or older types of insulation. Those who earn lower wages or are on fixed incomes are ill-equipped to adjust to sudden price spikes. And tenants count on the discretion of landlords, who may or may not be willing to make energy-efficient upgrades.

Energy bills are rising because demand is increasing. This is due, in part, to the development of artificial intelligence and the data centers it necessitates. A single large data center can use as much power as 100,000 households. America's aging power plants must be retired and rebuilt, and inadequate transmission infrastructure must be upgraded with higher capacity. The price of natural gas, a common fuel for electricity generation, has increased, also affecting ratepayers. Consumers are also plugging in more than before with everything from everyday-use devices and appliances to electric vehicles.

Regulated distribution of energy

Energy is harnessed at the source then distributed through grid systems. This grid distribution covers regions, often resulting in a monopoly where one for-profit company provides the energy and manages the transmission, sometimes across the entire state. The high cost of energy infrastructure makes building and maintaining one large grid rather than several smaller and overlapping grids practical. For example, 80% of Utah’s electricity is purchased from Rocky Mountain Power. Ratepayers in these allowed, investor-owned monopolies (most Americans) have no choice in who their provider is, which creates a need for regulation. 

In the U.S., 18 states have deregulated electric utilities, where the companies are allowed to sell a variety of plans to customers. This may or may not lead to cheaper electricity as numerous factors affect rates. The term “deregulation” is also a misnomer, as utilities in these states are still subject to regulation. 

Some customers receive their energy from nonprofit entities, such as municipally owned and customer-owned cooperatives that are generally not subject to the same regulatory process as investor-owned utilities. They are often self-regulated by their local government or customer-elected boards. They must undergo financial analysis, but rate changes are made democratically through voting. 

The role of regulators

“As a general rule, utility commissions are charged with assuring that utilities provide reasonable, adequate, and efficient service to customers at just and reasonable prices.” — The Environmental Protection Agency (EPA)

Understanding the regulation process of energy resources and the entities that provide them assists in advocacy for fair pricing, resource management, and environmental protections. 

Energy production and distribution is regulated by both state and federal regulators. The Federal Energy Regulatory Commission (FERC) is the independent agency that regulates interstate transmission, wholesale prices, and environmental regulation at the federal level. State regulatory commissions approve local utility rates and local energy infrastructure planning, oversee service to customers, and ensure environmental compliance, especially for investor-owned utility companies. These commissions are often known as public utilities commissions (PUCs) but have different names in various states. 

Rate increases for investor-owned utilities must be approved through a legal process known as a “rate case,” which lasts approximately one year as the regulators consider:

• Analysis of current utilities and costs

• Ratepayer protections

• Adherence to energy regulations

• Plans for how the company will cover infrastructure, maintenance, transmission, and fuel costs

How to get involved

Governments and members of society have an obligation to exercise responsible stewardship of the earth, thereby protecting not only the wellbeing of their citizens, but also that of both future generations and other citizens of the planet. — MWEG Principle of Ethical Government 2F

1. Know how to read your utility bill.

Energy utility companies are required to advertise several pieces of information on the bills they send. If you set up automatic billing, make a point to review your bill each month to check for any discrepancies from previous usage and to compare month to month. Learn how to read your electricity bill.

2. Understand fixed versus variable usage.

Usage charges vary, and discovering how your state, municipality, or cooperative determines charges will help you advocate for fair rates. Customers in deregulated jurisdictions can sometimes choose between a fixed rate or a variable rate structure. Most customers don't have this choice but can advocate to their utility commission or cooperative in favor of one versus the other or a combination of both.

Fixed rates typically provide more predictability compared to variable rates, which can decrease or increase depending on markets that are often volatile and subject to geopolitical events. How entities determine fixed versus variable rate structures can have a significant impact on energy consumption patterns and the value of energy efficiency. Sometimes prices are set differently for higher levels of consumption, for example. The Pennsylvania Public Utility Commission has created an overview of fixed and variable basics applicable in most states.

3. Know the basics about utility commissions.

Search for your utility commission on your city, county, or state government website, or on one of your utilities’ websites or apps. Utility commissions also investigate overcharging and mandate refunds to consumers, where applicable. You can also: 

• Attend commission meetings, including public witness days. Utility commissions are generally required by law or regulation to facilitate public comment periods for a rate case, and utilities are often mandated to notify the public of these sessions in their bills.

• Submit comments for public witness days. Send written comments, emails, or letters to the commission during the comment period. Those messages will become part of the official record.

• Submit informal complaints. File complaints with your commission's website for prompt attention to billing or service issues.

4. Know the basics about utility cooperatives (where applicable).

If you get your electric service from a cooperative, be an active member. Attend annual meetings, vote in director elections, read the bylaws and annual reports, talk to board members and managers, and join with other advocates. Remember that you are an owner with a voice. 

The impact of renewable energy on utility rates

Overall, renewable energy is the most cost effective of all energy sources. Advocating for the development of more renewables and battery energy storage systems in your utility's portfolio, along with grid management technology and energy efficiency standards, assists communities in controlling financial, environmental, and societal costs.

This article was written by Paulette Stauffer Henriod, environmental program specialist for Mormon Women for Ethical Government, and Sherilyn Stevenson, lead researcher and writer for Mormon Women for Ethical Government.