Utility rate hike requests and approvals have reached approximately $29 billion in the first half of 2025, more than doubling the total from the year-ago period, according to a July 10 report from PowerLines.
Utilities requested or received approval for more than $9 billion of rate increases in the second quarter, compared to $5 billion in the year-ago quarter. The rate increases are unlikely to slow down in the second half of 2025, according to PowerLines, an advocacy group looking to change utility regulation.
"Americans are experiencing an unprecedented utility affordability crisis. As high temperatures during the summer months put additional strain on the electric grid in many parts of the country, electricity system costs and utility bills will continue to spike," Charles Hua, founder and executive director of PowerLines, said in a news release.
The Western region of the US saw the largest amount of rate requests in the second quarter, with utilities requesting $4.4 billion. The Midwest region had $2.2 billion in requests, and the South and Northeast had $1.8 billion and $1.1 billion in rate hike requests, respectively.
The report noted that utilities' transmission spending increases and extreme weather events have been drivers of the rate spikes. Utilities' specific geography, market structure, resilience needs and growth in electricity demand are other factors influencing the rate increases.
The report also cited capacity market auctions in PJM Interconnection LLC and Midcontinent ISO that resulted in high clearing prices.
Growing power demand from artificial intelligence activity tied to datacenters has been a major new market for utilities; S&P Global Market Intelligence 451 Research forecast 59,000 MW of new datacenter power demand by 2029. Some experts have raised concerns about ratepayers fronting the costs of infrastructure needed to support the datacenter build-out.
US Rep. Suhas Subramanyam (D-Va.), who represents a congressional district in nicknamed "Datacenter Alley," has estimated that datacenters will contribute to a $276 annual increase in Northern Virginians' power bills within the next five years.
"It is imperative for state public utilities commissions (PUCs) to center the interests of American energy consumers in decision-making by scrutinizing utility rate increase requests and ensuring investments benefit the public interest," the report said. "Transparency and accountability should be cornerstones of utility regulation, and consumer engagement should be elevated as a central tenet of ratemaking processes."
