Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Trump Has an Electricity Price Problem

Look more closely at today’s inflation figures and you’ll see it.

Electricity.
Heatmap Illustration/Getty Images

Inflation is slowing, but electricity bills are rising. While the below-expectations inflation figure reported by the Bureau of Labor Statistics Wednesday morning — the consumer price index rose by just 0.1% in May, and 2.4% on the year — has been eagerly claimed by the Trump administration as a victory over inflation, a looming increase in electricity costs could complicate that story.

Consumer electricity prices rose 0.9% in May, and are up 4.5% in the past year. And it’s quite likely price increases will accelerate through the summer, thanks to America’s largest electricity market, PJM Interconnection. Significant hikes are expected or are already happening in many PJM states, including Maryland, New Jersey, Delaware, Pennsylvania, and Ohio with some utilities having said they would raise rates as soon as this month.

This has led to scrambling by state governments, with New Jersey announcing hundreds of millions of dollars of relief to alleviate rate increases as high as 20%. Maryland convinced one utility to spread out the increase over a few months.

While the dysfunctions of PJM are distinct and well known — new capacity additions have not matched fossil fuel retirements, leading to skyrocketing payments for those generators that can promise to be on in time of need — the overall supply and demand dynamics of the electricity industry could lead to a broader price squeeze.

“Trump and JD Vance can get off tweets about how there’s no inflation, but I don’t think they’ll feel that way in a week or two,” Skanda Amarnath, executive director of Employ America, told me.

And while the consumer price index is made up of, well, almost everything people buy, electricity price increases can have a broad effect on prices in general. “Everyone relies on energy,” Amarnath said. “Businesses that have higher costs can’t just eat it.” That means higher electricity prices may be translated into higher costs throughout the economy, a phenomenon known as “cost-push inflation.”

Aside from the particular dynamics of any one electricity market, there’s likely to be pressure on electricity prices across the country from the increased demand for energy from computing and factories. “There’s a big supply adjustment that’s going to have to happen, the data center demand dynamic is coming to roost,” Amarnath said.

Jefferies Chief U.S. Economist Thomas Simons said as much in a note to clients Wednesday. “Increased stress on the electrical grid from AI data centers, electric vehicle charging, and obligations to fund infrastructure and greenification projects have forced utilities to increase prices,” he wrote.

Of course, there’s also great uncertainty about the future path of electricity policy — namely, what happens to the Inflation Reduction Act — and what that means for prices.

The research group Energy Innovation has modeled the House reconciliation bill’s impact on the economy and the energy industry. The report finds that the bill “would dramatically slow deployment of new electricity generating capacity at a time of rapidly growing electricity demand.” That would result in higher electricity and energy prices across the board, with increases in household energy spending of around $150 per year in 2030, and more than $260 per year in 2035, due in part to a 6% increase in electricity prices by 2035.

In the near term, there’s likely not much policymakers can do about electricity prices, and therefore utility bills going up. Renewables are almost certainly the fastest way to get new electrons on the grid, but the completion of even existing projects could be thrown into doubt by the House bill’s strict “foreign entity of concern” rules, which try to extricate the renewables industry from its relationship with China.

“We’re running into a set of cost-push dynamics. It’s a hairy problem that no one is really wrapping their heads around,” Amarnath said. “It’s not really mainstream yet. It’s going to be.”

In some relief to American consumers, if not the planet, while it may be more expensive for them to cool their homes, it will be less expensive to get out of them: Gasoline prices fell 2.5% in May, according to the BLS, and are down 12% on the year.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Politics

Why Electricity Prices Might Not Be a Political Win for Democrats

Voters are mad at Trump over rising bills, but assigning blame is complicated.

A donkey on power lines.
Heatmap Illustration/Getty Images

Electricity prices are rising and voters are mad about it — two facts that might seem to add up to a political victory for Democrats.

Environmental groups and elected officials alike are gearing up to use electricity prices against Trump, citing the president’s multi-pronged assault on renewables as the problem and promising to immediately bring them down as the solution. “Cheap is clean and clean is cheap,” Hawaii Senator Brian Schatz said at Heatmap House during New York Climate Week, echoing what has become essentially a universal talking point among climate activists.

Keep reading...Show less
Blue
Climate

Atlantic Storms Approach as Shutdown Looms​

On disaster aid, rare-earth magnets, and China’s green steel

An approaching storm.
Heatmap Illustration/Getty Images

Current conditions: Hurricane Humberto has strengthened into a Category 4 storm as it makes its way northward, likely hitting Bermuda with heavy rainfall by midweek • Vietnam is evacuating thousands and canceling flights as Typhoon Bualoi makes landfall • Temperatures are surging to 113 degrees Fahrenheit in Paraguay, where the risk of wildfire is rising.


THE TOP FIVE

1. Atlantic storms approach as shutdown looms

The federal government could shut down as early as Tuesday if Congress doesn’t agree to a funding bill. Over the weekend, Republicans urged Democrats to join together to approve a short-term spending bill to stave off a shutdown. Democrats are under pressure to leverage the risk of a shutdown to halt what their supporters see as the more authoritarian actions of the Trump administration. But, as I reported in this newsletter last week, President Donald Trump has threatened to use the temporary closure of federal agencies to institute “mass firings” that could affect the remaining government workforce in charge of climate research, clean-energy financing, and weather forecasting. The risk comes right as Hurricane Humberto and Tropical Storm Imelda gather strength en route toward the East Coast, making steady federal data critical.

Keep reading...Show less
Blue
Climate

Overheard at New York Climate Week 2025

From the notebooks of Heatmap’s reporters and editors.

Talking about renewables.
Heatmap Illustration/Getty Images

The three letter acronym I heard the most during New York Climate Week wasn’t EPA, COP, NDC, or GHG. It was PJM. The country’s largest electricity market — the PJM Interconnection, which reaches into 13 states, including Pennsylvania, Ohio, Virginia, and Michigan — has become the poster child for data center growth, clogged interconnection queues, and political backlash to rising electricity prices. Nearly every conversation I have about PJM includes a preamble about how nerdy and impenetrable the whole field of wholesale electricity markets is. Even so, it’s quickly becoming a central preoccupation of the political system, especially in states like New Jersey, where electricity prices have become a central issue in the gubernatorial campaign. — Matthew Zeitlin

As expected, this climate week featured lots of chatter about artificial intelligence — both the pros and the cons. On Tuesday, I attended an actual debate on the topic hosted by Deloitte, titled “AI for Sustainability: Friend of Foe,” which asked four participants to argue for or against a strongly worded motion: “AI is humanity’s best hope for tackling climate change.” To be frank, I disagreed with the premise before either side launched into their arguments, as did many others in attendance. When the audience was polled ahead of time, 49% disagreed, 36% were undecided, and 15% agreed.

Keep reading...Show less
Green