As residential electricity costs climb, big users pay less

Wednesday, January 21, 2026

Between 2022 and 2024 residential electricity costs increased by 10%. (Photo by J. Maculan, Unsplash)

After years of wallet-draining food inflation, many Americans must now contend with soaring home electric bills. “Since February 2020, electricity prices have increased by an average of 40% across the country,” reports Shannon Osaka of The Washington Post. Overall, the brunt of the increased costs is being paid by residential customers even when they aren’t the biggest users.

Many utilities have increased rates to fund needed infrastructure builds, but residential customers are paying more than commercial users. Osaka writes, “Residential electricity costs rose by 10% between 2022 and 2024. Commercial users, spanning everything from small corner stores to giant, energy-sucking data centers, have seen rates increase just 3%.”

Building and repairing the poles, wires and transformers required for residential electricity delivery is costly and isn’t generally needed by large commercial users, which is one reason many residential customers pay higher rates. Oska notes, “The average electricity price at the end of 2024 was 16 cents per kilowatt-hour for homes and apartments, and just 13 cents for commercial customers.”

While infrastructure costs explain some of the difference in electrical prices, a complex system of lobbying goes on behind the scenes to determine how much a business will pay for electricity. Osaka reports. “In theory, each group is supposed to pay an amount that aligns with the cost to bring them power — but in practice, different groups can lobby for lower prices.”

Charles Hua, executive director of PowerLines, a group that works to lower electricity costs for consumers across the country, told Osaka, “Residential consumers feel like they don’t have a voice in our utility regulatory system.” Osaka adds, “Utilities often sign special contracts with data center customers that place them outside standard pricing agreements.”

Some states are working to prevent data centers from shifting their expansion costs onto residential customers. Osaka reports, “Virginia recently established a new class for data centers and other huge users of electricity, with agreements in place to make sure the data centers pay for more of the grid upgrades required.”