US electricity consumption grew by roughly 2% per annum between 1990 to 2005. Then it was essentially flat for nearly 15 years during which time – and despite continued growth in population – demand remained flat due to energy efficiency improvements as well as subtle structural changes in the composition of the US economy including a slow transition from manufacturing to service sectors, which tend to be less electricity intensive. Now, all indications are that we are at the dawn of a new era with growth rates projected to resume their historical patterns.
The Energy Information Administration (EIA) expects US annual electricity consumption to grow at around 1.7% between 2020 and 2026 (visual). It attributes most of the growth to the commercial sector, which includes data centers, followed by the industrial sector, which includes manufacturing.
EIA tracks electricity consumption by keeping track of sales to ultimate customers in the residential, commercial, and industrial sectors as well as sales to public transportation systems and customers and electricity used at industrial facilities that produce power. As illustrated in the chart below left, the EIA expects different growth rates in different sectors over the short run.
Where will the increased generation come from? The EIA expects much of the additional demand to come from solar and battery storage facilities as reflected in chart below on right.
The increased demand, however, is expected to be accompanied by rising prices. The EIA reckons that retail electricity prices, which have increased faster than the rate of inflation since 2022, will continue to increase through 2026. Even worse is that parts of the country where prices are already high are likely to experience even greater price increases than those with current low prices.
The price differentials are already noticeable between various regions and among utilities in different states. Some customers pay rates as low as 12 cents/kWh while others pay in excess of 50 cents/kWh – over 4 times as much – resulting in large differences in monthly electricity bills which is simply retail electricity price times the number of kWhs consumed (charts below).
According to the EIA the average US residential electricity rate was 16.5 cents/kWh in 2024 and the monthly consumption averaged around 865 kWh per residential customer with wide variations in both numbers.
The average electric monthly bill for residential customers was $144 in 2024 with those in high-cost states such as Hawaii and Connecticut, paying more than $200 per month, more than twice as much as customers in states such as New Mexico and Utah.
Other variables affect the monthly bills such as the average ambient temperature which affects air conditioning use. Customers in Hawaii would have paid much higher monthly bills but pay on average $213 per month, because they buy the least amount of grid-delivered electricity. This is in part due to mild climate but also attributed to the high penetration of rooftop solar systems which significantly reduces the need to buy expensive electricity from the grid. The 6 states with the lowest residential bills are in the Rocky Mountain region: Utah, New Mexico, Colorado, Wyoming, Montana, and Idaho. Customers in Utah pay the lowest average monthly bills at $89 per month.
Customers in Louisiana and Tennessee used more than twice as much electricity from the grid as those in Hawaii or California yet pay lower monthly bills because electricity prices are so much lower.
Prices and the weather are important variables in determining monthly bills but so are building codes and appliance energy efficiency standards. Which explains part of the reason for states with high retail rates to push for more stringent building codes while promoting more efficient appliances through standards, incentives and rebates. Ultimately what matters to most customers is not the retail price but the monthly energy bill.
This article appeared in the July 2025 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at [email protected]