You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
You’ve probably noticed — even Trump has noticed — but the reason why is as complicated as the grid itself.
You’re not imagining things: Electricity prices are surging.
Electricity rates, which have increased steadily since the pandemic, are now on a serious upward tear. Over the past 12 months, power prices have increased more than twice as fast as inflation, according to recent government data. They will likely keep rising in years to come as new data centers and factories connect to the power grid.
That surge is a major problem for the economy — and for President Trump. On the campaign trail, Trump vowed to cut Americans’ electricity bills in half within his first year in office. “Your electric bill — including cars, air conditioning, heating, everything, your total electric bill — will be 50% less. We’re going to cut it in half,” he said.
Now Trump has mysteriously stopped talking about that pledge, and on Tuesday he blamed renewables for rising electricity rates. Even Trump’s Secretary of Energy Chris Wright has acknowledged that costs are doing the opposite of what the president has promised.
Trump’s promise to cut electricity rates in half was always ridiculous. But while his administration is likely making the electricity crisis worse, the roots of our current power shock did not begin in January.
Why has electricity gotten so much more expensive over the past five years? The answer, despite what the president might say, isn’t renewables. It has far more to do with the part of the power grid you’re most familiar with: the poles and wires outside your window.
Before we begin, a warning: Electricity prices are weird.
In most of the U.S. economy, markets set prices for goods and services in response to supply and demand. But electricity prices emerge from a complicated mix of regulation, fuel costs, and wholesale auction. In general, electricity rates need to cover the costs of running the electricity system — and that turns out to be a complicated task.
You can split costs associated with the electricity system into three broad segments. The biggest and traditionally the most expensive part of the grid is generation — the power plants and the fuels needed to run them. The second category is transmission, which moves electricity across long distances and delivers it to local substations. The final category is distribution, the poles and wires that get electricity the “the last mile” to homes and businesses. (You can think of transmission as the highways for electricity and distribution as the local roads.)
In some states, especially those in the Southeast and Mountain West, monopoly electricity companies run the entire power grid — generation, transmission, and distribution. A quasi-judicial body of state officials regulates what this monopoly can do and what it can charge consumers. These monopoly utilities are supposed to make long-term decisions in partnership with these state commissions, and they must get their permission before they can raise electricity rates. But when fuel costs go up for their power plants — such as when natural gas or oil prices spike — they can often “pass through” those costs directly to consumers.
In other states, such as California or those in the Mid-Atlantic, electricity bills are split in two. The “generation” part of the bill is set through regulated electricity auctions that feature many different power plants and power companies. The market, in other words, sets generation costs. But the local power grid — the infrastructure that delivers electricity to customers — cannot be handled by a market, so it is managed by utilities that cover a particular service area. These local “transmission and distribution” utilities must get state regulators’ approval when they raise rates for their part of the bill.
The biggest driver of the power grid’s rising costs is … the power grid itself.
Historically, generation — building new power plants, and buying the fuel to run them — has driven the lion’s share of electricity rates. But since the pandemic, the cost of building the distribution system has ballooned.
Electricity costs are “now becoming a wires story and less of an electrons story,” Madalsa Singh, an economist at the University of California Santa Barbara, told me. In 2023, distribution made up nearly half of all utility spending, up from 37% in 2019, according to a recent Lawrence Berkeley National Laboratory report.
Where are these higher costs coming from? When you look under the hood, the possibly surprising answer is: the poles and wires themselves. Utilities spent roughly $6 billion more on “overhead poles, towers, and conductors” in 2023 than in 2019, according to the Lawrence Berkeley report. Spending on underground power lines — which are especially important out West to avoid sparking a wildfire — increased by about $4 billion over the same period.
Spending on transformers also surged. Transformers, which connect different circuits on the grid and keep the flow of electricity constant, are a crucial piece of transmission and distribution infrastructure. But they’ve been in critically short supply more or less since the supply chain crunch of the pandemic. Utility spending on transformers has more than doubled since 2019, according to Wood Mackenzie.
At least some of the costs are hitting because the grid is just old, Singh said. As equipment reaches the end of its life, it needs to be upgraded and hardened. But it’s not completely clear why that spike in distribution costs is happening now as opposed to in the 2010s, when the grid was almost as old and in need of repair as it was now.
Some observers have argued that for-profit utilities are “goldplating” distribution infrastructure, spending more on poles and wires because they know that customers will ultimately foot the bill for them. But when Singh studied California power companies, she found that even government-run utilities — i.e. utilities without private investors to satisfy — are now spending more on distribution than they used to, too. Distribution costs, in other words, seem to be going up for everyone.
Sprawling suburbs in some states may be driving some of those costs, she added. In California, people have pushed farther out into semi-developed or rural land in order to find cheaper housing. Because investor-owned utilities have a legal obligation to get wires and electricity to everyone in their service area, these new and more distant housing developments might be more expensive to connect to the grid than older ones.
These higher costs will usually appear on the “transmission and distribution” part of your power bill — the “wires” part, if it is broken out. What’s interesting is that as a share of total utility investment, virtually all of the cost inflation is happening on the distribution side of that ledger. While transmission costs have fluctuated year to year, they have hovered around 20% of total utility investment since 2019, according to the Lawrence Berkeley Labs report.
Higher transmission spending might eventually bring down electricity rates because it could allow utilities to access cheaper power in neighboring service areas — or connect to distant solar or wind projects. (If renewables were driving up power prices as the president claims, you might see it here, in the “transmission” part of the bill.) But Charles Hua, the founder and executive director of the think tank PowerLines, said that even now, most utilities are building out their local grids, not connecting to power projects that are farther away.
The second biggest driver of higher electricity costs is disasters — natural and otherwise.
In California, ratepayers are now partially footing the bill for higher insurance costs associated with the risk of a grid-initiated wildfire, Sam Kozel, a researcher at E9 Insight, told me. Utilities also face higher costs whenever they rebuild the grid after a wildfire because they install sensors and software in their infrastructure that might help avoid the next blaze.
Similar stories are playing out elsewhere. Although the exact hazards vary region by region, some utilities and power grids have had to pay steep costs to rebuild from disasters or prevent the likelihood of the next one occurring.
In the Southeast, for instance, severe storms and hurricanes have knocked out huge swaths of the distribution grid, requiring emergency line crews to come in and rebuild. Those one-time, storm-induced costs then get recovered through higher utility rates over time.
Why have costs gone up so much this decade? Wildfires seem to grow faster now because of climate change — but wildfires in California are also primed to burn by a century of built-up fuel in forests. The increased disaster costs may also be partially the result of the bad luck of where storms happen to hit. Relatively few hurricanes made landfall in the U.S. during the 2010s — just 13, most of which happened in the second half of the decade. Eleven hurricanes have already come ashore in the 2020s.
Because fuel costs are broadly seen as outside a utility’s control, regulators generally give utilities more leeway to pass those costs directly through to customers. So when fuel prices go up, so do rates in many cases.
The most important fuel for the American power grid is natural gas, which produces more than 40% of American electricity. In 2022, surging demand and rising European imports caused American natural gas prices to increase more than 140%. But it can take time for a rise of that magnitude to work its way to consumers, and it can take even longer for electricity prices to come back down.
Although natural gas prices returned to pre-pandemic levels by 2023, utilities paid 30% more for fuel and energy that year than they did in 2019, according to Lawrence Berkeley National Lab. That’s because higher fuel costs do not immediately get processed in power bills.
The ultimate impact of these price shocks can be profound. North Carolina’s electricity rates rose from 2017 to 2024, for instance, largely because of natural gas price hikes, according to an Environmental Defense Fund analysis.
The final contributor to higher power costs is the one that has attracted the most worry in the mainstream press: There is already more demand for electricity than there used to be.
A cascade of new data centers coming onto the grid will use up any spare electron they can get. In some regions, such as the Mid-Atlantic’s PJM power grid, these new data centers are beginning to drive up costs by increasing power prices in the capacity market, an annual auction to lock in adequate supply for moments of peak demand. Data centers added $9.4 billion in costs last year, according to an independent market monitor.
Under PJM’s rules, it will take several years for these capacity auction prices to work their way completely into consumer prices — but the process has already started. Hua told me that the power bill for his one-bedroom apartment in Washington, D.C., has risen over the past year thanks largely to these coming demand shocks. (The Mid-Atlantic grid implemented a capacity-auction price cap this year to try to limit future spikes.)
Across the country, wherever data centers have been hooked up to the grid but have not supplied or purchased their own around-the-clock power, costs will probably rise for consumers. But it will take some time for those costs to be felt.
In order to meet that demand, utilities and power providers will need to build more power plants, transmission lines, and — yes — poles and wires in the years to come. But recent Trump administration policies will make this harder. The reconciliation bill’s termination of wind and solar tax credits, its tariffs on electrical equipment, and a new swathe of anti-renewable regulations will make it much more expensive to add new power capacity to the strained grid. All those costs will eventually hit power bills, too, even if it takes a few years.
“We're just getting started in terms of price increases, and nothing the federal administration is doing ‘to assure American energy dominance’ is working in the right direction,” Kozel said. “They’re increasing all the headwinds.”
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
More than a quarter say they’re being hit hard, according to a Heatmap Pro poll.
Most Americans say that rising electricity bills are having at least “a decent amount” of impact on their household finances, according to a new Heatmap Pro poll.
The poll, which surveyed more than 3,700 registered voters last month, gives context to how electricity prices have come to dominate national headlines in recent months — and why they’ve become an urgent issue at the state and local level in a few key regions.
On the 2024 campaign trail, President Donald Trump promised to cut voters’ power bills in half within a year of getting elected. So far, that hasn’t happened: Electricity prices have risen more than twice as fast as inflation over the past 12 months and are still rising, according to government data.
Voters are beginning to feel the squeeze from that inflation. In our poll, 26% of American registered voters said that rising electricity prices were having “a lot” of impact on their personal finances. Another 31% said that rising prices were having a “decent amount” of impact.
Still, for about 40% of the country, those high prices are more a pinch than a pain. Thirty percent of registered voters said that rising prices only had “a little bit” of impact on their personal finances, while 9% said they were having “none at all.” There wasn’t a significant partisan division in sensitivity to the high prices.
The survey did show some regional distinctions, however. In the Northeast, 63% of registered voters reported that rising power prices were causing them “a lot” or “a decent amount” of trouble. In the Midwest, only 52% of voters told the poll the same thing. The South, with 56%, and the West, with 61%, landed somewhere in between.
As might be expected, lower-income voters described more trouble. More than 70% of voters with household income below $50,000 a year said that rising power bills were having “a lot” of impact on their finances. Some 62% of voters earning less than $100,000 also described issues. So did 59% of white voters without a college degree.
The rising cost of power has become a major question in New Jersey’s political race, where it has haunted ads and led Representative Mikie Sherrill, the Democratic candidate, to promise to freeze power rates for a year if she is elected.
Energy Secretary Chris Wright has said that rising electricity costs are his No. 1 concern as energy secretary, although he has conceded the Trump administration is “going to get blamed” for surging power rates. The Trump administration has revoked permits for new offshore projects along the East Coast, and congressional Republicans have ended tax credits for solar and wind energy.
Wright told Politico in August that he blames “momentum of the Obama-Biden policies” for the surging power rates. Donald Trump was president from 2017 to 2021, after Obama and before Biden.
On Trump’s coal push, PJM’s progress, and PG&E’s spending plan
Current conditions: Tropical Storm Imelda is gaining wind intensity this week, bringing flooding rain and storm surge to the southeastern U.S. • Hurricane Humberto, now a Category 4 storm, is passing west of Bermuda, bringing marine hazards to the U.S. East Coast • Typhoon Bualoi is pummeling the Philippines and Vietnam, where it’s already killed a dozen people.
If you were planning to cash in on the $7,500 federal tax credit for buying an electric vehicle, you’d better make moves. Today’s the last day to claim the so-called 30D tax credit. Congress moved the expiration date for the writeoff to September 30 as part of the One Big Beautiful Bill Act.
That doesn’t mean all government incentives for EVs are going away. New York still offers a $2,000 “Drive Clean Rebate” for some vehicles, and California offers up to $7,000 in rebates. Prices for new electric cars are still higher than those for comparable internal combustion vehicles, a frustratingly persistent condition the federal tax credit was meant to help address. Owning an EV has its own rewards, however, including lower fuel and maintenance costs over time. For more on how to go about choosing an EV, here’s Andrew Moseman’s guide from our Decarbonize Your Life series.
Stacks at the Hugh L. Spurlock Generating Station in Maysville, Kentucky. Jeff Swensen/Getty Images
The Trump administration is opening more than 13 million acres of federal land to leasing for new coal mines. And it’s providing funding to keep demand for coal roaring. The Department of Energy announced Monday it will offer $625 million to upgrade, reopen, and “modernize” coal-fired power plants across the country.
It’s a sign of the trend Heatmap’s Matthew Zeitlin clocked in July: “Global coal demand is rising,” he wrote, “and America wants in.” Indeed, in a press release, Secretary of Energy Chris Wright boasted that the new funding would “keep our nation’s coal plants operating” and would ultimately help lower rising electricity prices. “Beautiful, clean coal will be essential to powering America’s reindustrialization and winning the AI race,” Wright said. “Coal built the greatest industrial engine the world has ever known, and with President Trump’s leadership, it will help do so again.”
The Trump administration is shutting down or shrinking roughly one third of the federal offices that track bird populations after hurricanes, map megafire risks in the Midwest, figure out new ways to fight invasive plants, and prepare communities’ stormwater drains against intense flooding. The U.S. Geological Survey’s Climate Adaptation Science Centers “are expected to drastically wind down and possibly close after Tuesday because of a lack of funds,” The Washington Post reported Monday. The centers in the South Central, Northeast, and Pacific Islands regions, which “collectively cover about one-third of the U.S. population and are funded under the Interior Department,” are potentially facing permanent closure.
The shuttering isn’t linked to a potential government shutdown, and appears planned as part of the Trump administration’s broader cuts to federal research. “We’re not willing to just drop everything and walk away,” Bethany Bradley, the co-director of the Northeast Climate Adaptation Science Center and a University of Massachusetts professor, told the newspaper. “But the reality is we can’t do this for free.”
Amazon, Google, Microsoft, utility giant Constellation, and power company Talen came together to propose a way to meet electricity needs in the nation’s largest power grid. Under their plan, the PJM Interconnection would allow large power users to volunteer for time-limited periods of reducing electricity demand when the grid is stressed. The proposal also outlines plans for time-limited use of backup generation. If making the load more flexible doesn’t work, PJM would increase the supply of firm power through procurement.
The pitch comes in response to an earlier mandatory curtailment proposal from PJM, which drew fierce blowback from many of the companies that wrote up this alternative. (“Everyone hates it,” Matthew wrote.) As analyst Aniruddh Mohan noted, PJM ultimately withdrew its initial load flexibility proposal.
Pacific Gas & Electric announced plans to spend $73 billion on upgrades to the electrical grid in California to meet the surge in demand from data centers. PG&E, as it’s known, has been deemed responsible for multiple large-scale wildfires in recent years, incurring billions in damages. As the utility told investors on a call Monday, the new investment plan “comes on the heels” of new liability reforms in the state. Under Senate Bill 254, the state expanded its wildfire fund by $18 billion and “acknowledged that the utilities and their customers cannot continue to carry the full burden of climate-driven catastrophic wildfires, especially when the utility has acted prudently,” PG&E CEO Patricia Poppe said, according to Power magazine. The utility had filed a proposal in March to build 700 miles of underground power lines between 2026 and 2028 and complete 500 miles of additional wildfire safety system upgrades by next year.
Fervo Energy, the company using fracking technology to harness the planet’s molten energy, is undeniably leading the race to commercialize next-generation geothermal. But a clear second-place contender emerged Tuesday when XGS Energy released the results from its first commercial test, the company told Heatmap exclusively. The startup’s system outperformed the executives’ expectations, setting the stage for full-scale development. While Fervo’s technology represents what’s known as “enhanced” geothermal system, XGS’ approach is what’s known as “advanced” geothermal systems that rely on closed-loop infrastructure, as Matthew previously explained.
The company is vying to challenge Fervo for leadership in the next-generation geothermal market.
The geothermal startup XGS Energy has now completed four months of tests to see whether its technology can maintain steady production of heat at temperatures above what’s needed to generate energy. Over 3,000 hours, the company monitored the drilling process and checked how heat flowed from its wells, the status of their temperature, and how precisely XGS’ mathematical predictions matched the outcome of the testing.
The results, which the company shared exclusively with Heatmap, were “almost too good,” XGS CEO Josh Prueher told me.
“Had we been within 10% of predictive performance, we would have been pretty happy with the outcome,” Prueher said. “Turns out we were within 2% under a variety of different parameters.”
“It worked like a charm,” he said.
To understand what makes XGS Energy stand out among the geothermal startups racing to commercialize next-generation technology, it helps to compare the company to its fellow Houston-based rival that’s currently leading the sector, Fervo Energy. Unlike Fervo, XGS doesn’t use fracking technology to drill horizontal wells in pursuit of hot, dry rocks from which to harvest energy.
Instead, XGS drills vertical wells and inserts a closed steel pipe with water and fills the gap between the metal and the rock with a patented slurry that conducts heat. Technology like Fervo’s requires pumping cold water over the fractured hot rocks to harvest heat. But with its method, XGS claims, it avoids losing any water.
The testing took place off the US-395 highway in a volcanic field in California’s Mojave desert, sandwiched between the eastern edge of the Sequoia National Park and western border of Death Valley National Park. The geothermal field XGS tapped is already actively producing energy for the Coso Operating Company, which runs a 270-megawatt geothermal power plant on the land. The results, the company said, showed the “unprecedented predictability and active control of field performance” of XGS’ technology “versus other geothermal systems, which are subject to complex and continuously changing subsurface reservoir conditions.”
At least one outside observer agreed. “This is impressive, and something to be proud of,” Advait Arun, an energy analyst and senior associate at the think tank Center for Energy Enterprise who co-authored a recent report on next-generation geothermal, told me.
While the 3,000 hours of testing still falls short of the year’s worth of data Fervo has produced at one of its sites, it’s the longest any other competitor in the space has successfully demonstrated its approach so far, Arun said.
“These guys would be second to Fervo in terms of their ability to prove a commercial-scale performance test,” he added.
XGS is now poised to build a 150-megawatt power plant for Meta’s New Mexico data centers. Even after that’s complete, however, Prueher said the surrounding area has nearly 3 gigawatts of untapped heat. In California, where the company is headquartered and carried out its demonstration project, there’s a growing need for clean power sources that don’t further tax the depleted water table.
“A lot of the historical sensitivities around developing in California — a state where, like many others, water usage for industrial development is kind of a no-no — because we don’t need water, we have some real advantages,” Prueher said.
At a moment when surging demand from data centers is supercharging dealmaking in the electricity sector, Prueher said XGS is looking beyond the boom from the artificial intelligence buildout.
“It’s not about data centers,” he said. “It really is just the fundamental power needs of California. With the restrictions around water usage, we line up really, really well for California.”
For now, the company remains focused on the U.S. But Prueher said XGS is well suited to export its technology to East Asia, as well, where countries along the Pacific Rim have vast geothermal potential and growing electricity demand but limited development. XGS already has ties to the Philippines and “may actually be subsurface” — i.e. digging wells — there by the end of 2026, Prueher told me.
The “big enchilada,” he said, would be establishing a foothold in Japan, where the onsen hotspring industry has long protested geothermal development they say could diminish the resource that makes the ancient bathhouse tradition possible. Prueher told me his technology mitigates concerns over fracking-induced earthquakes, as well.
For now, he said, his main market is in the fast-growing Southwest. The executive compared this moment to 2021, when he worked at a battery company. That February, Winter Storm Uri collapsed the Texas grid as natural gas pipes froze and demand for electricity to heat homes designed to stay cool in a typically arid climate skyrocketed. Back then, he said, batteries were “still a pretty new asset class.”
“People were still uncertain about how it would perform,” Prueher said. But his company was “able to keep our batteries up and operating 100% of the time, no one minute of downtime during that entire episode.”
“From a market perspective, the storm showed that, if you can bring this new type of technology into the market, it can really deliver remarkable value,” he added. “We made 10 years of revenue in six days.”
In a lot of ways, he went on, “this is the same thing.”
“We’ve proven a technology is reliable,” Prueher said. “It works at commercial scale over a period of time. We would regard this as a real pivot point in the industry.”