Why Lower Electricity Prices May Not Mean Lower Electric Bills

A lot of the current discourse around energy affordability is about the rates utilities charge for electricity. Proposals to reduce utility profits, require data centers to bring their own power, and other regulatory reforms all have potential to relieve pressure on utilities to charge as much as they can for each kilowatt-hour you use.

Electricity rates are not the whole story when it comes to why so many Americans find energy to be unaffordable, however. Sometimes, they aren’t even the biggest culprit.

Rates are just one of the myriad factors that play into a given household’s monthly electric bill. Anything that affects energy consumption — a building’s size, its insulation, the type of heating it uses, the local climate, and the occupant’s habits — may outweigh whatever the utility is charging in determining why residents of one city or state pay more or less than another.

The factors driving higher or lower bills can be regional. Hotter states tend to consume more electricity than colder states because of air conditioning. Look at data from Heatmap and MIT’s Electricity Price Hub and you’ll see that bills in July tend to be higher across the Sun Belt. But bill differences can also be hyper-local. A poorer neighborhood might consume less power than a wealthier neighborhood in the same town if those residents live in smaller homes or place a greater emphasis on conserving energy. The opposite can also be true — if the houses in the poorer neighborhood are not insulated or have inefficient air conditioners, those residents may end up with higher bills than their neighbors.

Let’s look at a few illustrative examples. Here, you can see that New York City’s electric rates are much higher than in neighboring Long Island.

Long Island is served by a public, state-owned utility, which can keep rates low because it doesn’t have the tax obligations or profit requirements that Con Edison, the private investor-owned utility that serves New York City, has. Still, city-dwellers pay less, on average — and in the summer, nearly half as much — for electricity each month than their neighbors to the east.

In this case, it’s not a huge mystery why that is. Long Island is made up of mostly single-family homes, which consume more electricity for lighting, air conditioning, etc., than apartments in New York City.

A perhaps more surprising example is to compare Georgia Power, which serves the majority of the population in the Peach State, to PSE&G, which serves most of the population of New Jersey. PSE&G’s price per kilowatt-hour has been higher than Georgia Power’s over the last three years, often twice as high.

But monthly power bills in the two states were much more comparable. Bills in Georgia were frequently higher than in New Jersey, though you can see that the gap started to close after rates in New Jersey spiked in the summer of 2025. That increase arrived courtesy of prices in PJM Interconnection, the larger energy market New Jersey is a part of, which shot up as a projected influx of data centers increased future estimates of power demand. (My colleague Matthew Zeitlin has more on what’s going on in PJM, in case you’re interested.)

New Jersey and Georgia are large, heterogeneous places with a wide range of socioeconomic profiles and housing types, so there are many factors playing into the difference, but we can theorize about a few: New Jersey has more dense housing and more temperate summers; meanwhile Georgia households are more likely to use electricity to heat their homes than those in the Garden State.

About a quarter of U.S. utilities have an inverse relationship between rates and bills, according to the MIT researchers behind the Electricity Price Hub. In other words, about 25% of electric utilities charge rates that are lower than the national median, but their customers’ monthly bills are higher than the median bill, or vice versa — rates above the median, but bills below it.

While rates are easier to compare across regions, investigating what’s driving high bills can reveal an entirely different set of policies that could address affordability. For example, policies that incentivize better building insulation or the installation of more efficient heating systems may go further on affordability in some places than fights over utility rates.

But it’s important not to look at bills alone. In other cases, solutions that directly reduce individual households’ bills can have indirect effects on overall rates. When a homeowner installs rooftop solar, for example, they can lower their own bills, but the cost for the utility of operating a reliable electric grid doesn’t necessarily go down, meaning these costs can “shift” to customers without solar through higher rates. When solar panels are combined with batteries, however, they have potential to operate more flexibly and provide valuable grid stability services that can lower utility costs and put downward pressure on rates.