Sky high electric bill? Check how much summer heat is costing you

With summer heat waves pushing temperatures into the 90s and beyond, Americans are facing higher electric bills, as air conditioners are working overtime and electric meters are whirring faster.  
Each gust of cool air drives up electricity usage, leading to the highest bills ever over most of the country this summer. 
A USA TODAY analysis of U.S. Energy Information Administration forecasts showed a 17% increase this summer compared to 2021, with the average bill in June, July, and August expected to hit $173.  
Prices are higher because Americans are using air conditioning more as temperatures rise in addition to the lingering effects of natural gas price spikes due in part to the Russian invasion of Ukraine. With an increase in electricity demand, the adoption of more renewable energy, and the occurrence of more frequent wildfires and storms, utilities are also investing to strengthen the electric grid – and passing the costs along to customers.
“If you have an AC, you run it more. We are really seeing people in places like Washington State and Oregon, places where they just didn’t have air conditioning 20 years ago, putting in air conditioning,” said Severin Borenstein, an economic analysis and policy professor at the University of California, Berkeley’s Haas School of Business. 
These predictions for even higher electric bills are based on this year’s weather. If record heat levels continue to increase, as they have for the last 12 months, bills could go even higher.
“If temperatures end up much hotter than expected, households are likely to face higher electricity bills, especially in the southern states,” the Energy Information Administration noted in an analysis paper. 
Rising electric bills add to the financial burden for Americans who continue to grapple with higher grocery and gas prices, as wages fail to keep pace with the rising cost of living. 
For many, especially low-income families, it becomes a difficult choice between covering essential expenses and running air conditioners to prevent heat stroke and other heat-related illnesses. 
About 28% of households reported cutting or forgoing expenses for food or medicine, for a month or more, to pay an energy bill in the last 12 months, according to a Census Bureau survey conducted from March 5 to April 1. The figure was 50% for the lowest-income households.
All regions in the country will see an increase in monthly bills this summer compared to the same period in 2021, ranging from 24% in the West South Central region – including Texas and Oklahoma – to 6% in the West North Central region, which includes Minnesota and Nebraska, according to the Energy Information Administration’s outlook.
To determine state-specific changes, USA TODAY applied the projected regional increases to historical state retail electricity data. The analysis revealed that households in all but five states are likely to see a rise in their summer bills compared to 2021. Families in as many as 30 states may notice an increase of more than 10%, with the most significant rises anticipated in Maine, Florida, New Hampshire, and Texas. Notably, Maine is expected to see bills rise by 50%, an increase attributed to upgrades in its power lines and grid to better withstand frequent storms. Michigan, the Dakotas, Wyoming, and Utah are the few states expected to see marginal declines.
“Since our forecasts represent an average for all the states in that region, some states might have higher relative growth, and some might have lower relative growth,” said Tyler Hodge, a senior industry economist at the Energy Information Administration. 
Why don’t electricity prices track natural gas in 2024? 
The consumption and cost of one unit of electricity determine the amount on an electric bill. Usage follows a seasonal pattern, while electricity rates are determined based on several factors, including natural gas prices and utility costs. Natural gas is the leading source of energy in the country.
Electricity prices are significantly higher today than before 2022 when natural gas prices spiked due to a widespread increase in prices during the COVID-19 pandemic. The war in Ukraine put further pressure on prices as exports to Europe ramped up to satisfy the demand that was previously filled by Russian gas. 
During most of the last 10 years, electricity price increases remained below the inflation rate. However, due to increased demand for natural gas starting in early 2022, electricity prices jumped above the inflation rate, rising 10% in 2022 and 6% last year. 
Natural gas prices have rebounded this year but electricity prices are yet to return to their pre-2022 level. According to the Energy Information Administration, it is unlikely that prices will revert to their previous rates, as average annual electricity prices rarely drop, particularly when the sector is contending with ballooning transmission and distribution costs.
Investments in upgrading the grid and strengthening power lines to withstand extreme weather events – such as wildfires, hurricanes, and storms – are driving up costs, which are ultimately reflected in customers’s electric bills, experts say. 
Brendan Pierpont, electricity modeling director at Energy Innovation, a think tank, highlighted that natural gas price spikes in recent years still account for some of the increased electricity bills. Pierpont noted that states such as Kansas, Iowa, and New Mexico, which have embraced large-scale renewables, have seen a relatively modest increase in rates.
Over the last two decades, the energy grid has evolved significantly, shifting from coal to natural gas and expanding renewables like solar and wind. Harrison Fell, an associate professor at North Carolina State University whose work focuses on renewable energy, added that while renewables generally lower wholesale prices, grid upgrades to accommodate them could potentially lead to some price increases. 
The unpredictability of weather patterns remains a major source of uncertainty in the Energy Information Administration’s forecast. 
So far this year, many regions of the country have been engulfed in a scorching heat wave, with temperatures exceeding the 90s and affecting more than 135 million people. Some states have also faced hurricanes and storms. 
This extreme heat not only underscores the variability and unpredictability of weather patterns but also highlights the potential for significant fluctuations in electricity consumption and costs across different states. 
Borenstein suggested one solution to keep rates steady: funding grid upgrades through the state budget rather than passing the costs on to customers, particularly since these increases disproportionately affect low-income households. 
“We’re going to see more of these natural disasters and more investments to reduce the cost of these disasters, and transmission and distribution costs are only expected to go up,” said Borenstein. 
Pierpont said, “We’re going to have hotter summers. We’re going to have more potential impacts on the grid from stronger storms and extreme weather. It’s really important that we try to figure out ways to meet those resilience needs of the grid without overly burdening customers.” 
“These costs are becoming really significant for customers.”