Customers' Rising Utility Costs Continue in 2026

Recently, utilities in 22 states raised natural gas and electricity rates on residential bills starting on January 1. This spate of hikes was only a part of 152 rate increase that began in 2024 and may not end until spring 2026. By then, 103 utilities in 42 states will have increased their delivery rates by an average of 10.77%.

The chief factors driving rising utility rates these past few years continues to be rising costs. These costs are not only to meet energy supply but also those to expand, repair, and improve energy infrastructure. This last one particularly resonates in middle Atlantic states where consumers in the PJM Interconnection are seeing daunting rate hikes due to larger demand from current and future data centers.

Key Points

1. Electricity rates rose year to date by an average of 5.21%. Similarly, natural gas rates rose during the same time period by 5.26%.
2. Generally, the middle Atlantic region had the highest increases. In particular, the District of Columbia saw it's electric rates rise by a whopping 23.92% or about 7 cents per kWh. Meanwhile, Maine's natural gas rates jumped 97.54%, doubling from $2.03 per ccf to $4.01 per ccf.
3. Connecticut saw its electricity rates fall by 7.60%. Minnesota saw its natural gas rates fall by 29.08%.

Lastly, investor owned utilities earn a return on equity (ROE) on their grid upgrades and expansion expenditures for their investors. Generally, utilities file requests with their state utility commissions for a return of about 9% that they receive from their customers through their monthly bills. With a few exceptions, most utilities have been allowed to charge their customers for repairs and upgrades to their delivery systems at what seemed a normal and fair rate. It's significant to note that most of the rate increases from 2024 through 2026 in those 42 states were for capital expenditures.

However, because utilities have been adding so many improvements, expenditures have ballooned and over time those costs have substantially piled up on customers' monthly bills.

For example, improvement expenditures (such as pipeline or substation repairs, delivery network expansions and upgrades, etc) rose from $90.3 billion in 2012 to $134.1 billion in 2021, a rise of $40 billion (48.5%). Indeed, costs have accelerated in recent years, especially given expensive supply chain shortages, tariffs, and interest rates. Since 2021, capital expenditures have increased by about 55% to about $207.9 billion in 2025. A back-of-the-napkin-estimate using the standard 9% ROE value puts customer payments for utility improvements rising from $12.1 billion in 2021 to $18.8 billion in 2025.

And with this kind of spending expected to hit $1.1 trillion in five more years, utility customers may expect their natural gas and electric bills to rise even faster

How Electricity Costs Compare by State

The following tables illustrate how electricity and natural gas costs vary dramatically across the country.

While both Hawaii and California have the highest electricity costs, they face completely different challenges. Hawaii has no links to the main U.S. grid. It is completely "islanded" with no less than 6 separate electric grids. Each of these must generate its own power using fuel brought in by ship. California, meanwhile, mainly relies on natural gas that is piped into the state to generate some of its power while the rest is imported from other states.

Similarly, Connecticut and New Hampshire share the problem of all New England states. Both rely on piped-in natural gas to power their generators. Consequently, since over half of CT power is from natural gas, Connecticut electricity rates are among the highest nationally. Yet, while the 35 year old Seabrook Station nuclear power plant provides much of the state's power, New Hampshire electricity rates tend to be higher due to the natural gas generators that serve the state and the rest of New England.

Meanwhile, rising capacity rate auction costs hit Illinois electricity rates in both of the state's regional grids (PJM in the north, MISO to the south). Customers who received energy through utility price to compare rates saw higher rates for their electric supply starting in July. As a result, this raised the state's average residential electric price by 13.71% over last year.

How Natural Gas Costs Compare by State

Natural gas commodity prices stayed elevated for much of 2025, especially for states without their gas resources that must pipe in their supply. In particular, Maine natural gas rates remained high even after the frigid cold snap of January 2025.

Electricity and Natural Gas Prices by State

Note: Because rates in most states are in hundred cubic feet (ccf), we converted EIA's prices to reflect this rate. However, as many states and utilities use MCF or therms, we provide conversion formulas below.

CCF to MCF: CCF X 10 = MCF
CCF to Therms: CCF/1037 = Therms

Methodology

Our data comes from the most recent report period available from the EIA, (October, 2025.) EIA average rates are "bundled" to combine supply costs (generation) and delivery costs (power distribution via utility poles and wires).

Residential price per kilowatt hours was gathered from EIA Electricity Monthly report for October 2025 from Table 5.6.A. Average Price of Electricity to Ultimate Customers by End-Use Sector. We then gathered monthly natural gas delivered prices for residential customers for October 2025 from EIA's Data Series for Natural Gas prices. In those instances where October pricing was unavailable, we used data for the next most recent month.

Not all the 152 rate hikes are reflected in the current EIA pricing data, including those increases that began on Jan. 1, 2026. As a result, some state averages shown here may be somewhat below the current average pricing.

Sources

EIA Electric Power Monthly
https://www.eia.gov/electricity/monthly/index.php

EIA Price of Natural Gas Delivered to Residential Consumers (Dollars per Thousand Cubic Feet MCF)
https://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_m.htm

The New Year Rings In Higher Energy Rates
https://www.utilityrates.com/resources/the-new-year-rings-in-higher-energy-rates

Edison Electric Institute, 2021 Financial Review
https://www.eei.org/-/media/Project/EEI/Documents/Issues-and-Policy/Finance-And-Tax/Financial_Review/FinancialReview_2021.pdf

Investor-owned utilities could spend $1.1T between 2025 and 2029: EEI
https://www.utilitydive.com/news/investor-owned-utilities-spending-more-than-ever-eei/802315/