Rising Electricity Prices Started Well Before AI

U.S. electricity prices have risen from 13 cents per kilowatt-hour in 2020 to 19 cents per kWh in 2025. Prices on the East and West coasts and in major U.S. cities are far higher. Most of these price increases took place under the Biden administration when states and the federal government forced wind and solar into the grid at the expense of coal, natural gas, and the U.S. consumer. Prices for electricity, prior to 2020, were nearly flat for a decade. 

People and businesses are talking about energy as electricity prices rise and demand for power grows. As companies scale up artificial intelligence data centers, demand for power is growing, and the call on electricity from utility companies will continue to rise. States like New York and California are seeing prices as high as 40 cents per kWh, in some cities, nearly as high as electricity prices in Germany, at 45 cents per kWh. 

But the increase in electricity prices began before the large data centers and AI demand. Prices started rising in the U.S. in the past few years with the decommissioning of coal-fired power generation and the rapid additions of wind and solar power into the grid. Low-cost, reliable, and dispatchable power, in the form of coal (and nuclear power in California), has been removed as higher-cost and intermittent power from wind and solar was added. 

These rising costs are happening in the most energy-rich nation in the world. The U.S. is producing 13.8 million barrels per day of oil and 132 billion cubic feet per day of natural gas, and has more coal reserves than any nation on Earth. The U.S. has no excuse for such high electricity costs or lack of access to energy. Each year, hundreds of thousands of households are disconnected from utilities due to rising costs. 

The demand for power comes not just from AI, but homeowners, businesses, and, critically, manufacturing. Access to energy and low utility bills do not just help the American household and consumer, they help business and manufacturing and give the U.S. strategic advantages against major competitors like China. China’s abundant and cheap coal-fired power generation costs as low as 0.03 kWh in Xinjiang, underpinning their ability to manufacture goods, from making T-shirts to refining rare earths. 

The Trump administration has prioritized energy policy reforms, focusing on deregulation, refilling the Strategic Petroleum Reserve, and emphasizing liquid natural gas exports. The administration is also focused on reinvigorating the defense industrial base and producing more goods in the U.S., from chips to automobiles. All of this requires energy, specifically electricity. And competition with nations like China increasingly comes down to resource access and energy costs.

Henry Hub is the pricing point for natural gas futures on the New York Mercantile Exchange. In the U.S., Henry Hub natural gas prices have been over $3 a thousand cubic feet/mcf in 2025 but were only $2 in 2024. The consumer, however, does not see these low natural gas prices the same way they see lower fuel prices at the pump with lower oil prices. The residential consumer paid an average of $17 mcf in 2024 and has paid an average of $19 in 2025. The American consumer and American business are not seeing the pass-through benefits of high natural gas production and low natural gas prices the way they are benefiting from U.S. oil production. 

The Energy Information Administration’s latest Short-Term Energy Outlook is projecting a spike in natural gas prices in 2026 and 2027, not because more natural gas will be pulled into the U.S. grid for power generation, but because LNG exports are expected to rise at a steady clip. There are growing concerns about price spikes and shortages of U.S. natural gas due to rising LNG exports. Some are now pointing to natural gas and growing LNG exports, in addition to AI, as the source of rising electricity prices. 

The U.S. has sufficient natural gas to support LNG export growth, growing electricity demand for AI, manufacturing, and the American consumer, but this natural gas needs to get into the grid. To ensure affordable and reliable electricity, utilities need to prioritize dispatchable energy sources like natural gas and coal while halting any wind and solar expansion. The decommissioning of coal-fired power generation needs to stop, and utilities need to begin passing along natural gas savings to the consumer. 

President Donald Trump has made energy a key priority of this administration. Utility companies need to squarely address their environmental, social, and governance pay metrics and alignment with global climate initiatives and focus on affordable energy. The American household and industry should not be paying utility companies to put wind and solar into the grid while disadvantaging affordable, stable, reliable, and energy-dense fuels like natural gas and coal. 

Natural gas power generation should be surging. When paired with reliable, low-cost American coal, this energy abundance will allow American households to thrive and American industries and businesses to compete directly with China. 

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of The Daily Signal.

The post Rising Electricity Prices Started Well Before AI appeared first on The Daily Signal.