Electricity rates are soaring across the region and the country. Power demand from data centers, electrification, and other large-scale projects has increased exponentially, while growth in supply has not come close to keeping pace. As a result, customers in some parts of the region saw their electricity bills rise by as much as 20% this past summer. There are a variety of reasons that energy rates are increasing, and here, we take a dive into electricity bills from around the region to try and understand what determines the amount due, and what is behind the jump.

Depending on location and which utility company provides the service, one electricity bill may look very different than another in a neighboring state or even city. Our region has several utility companies that bring power to consumers, all of which have different pricing structures. The largest, serving more than 8 million combined customers, include PSE&G in New Jersey, Con Edison and PSE&G Long Island in New York, and Eversource in Connecticut.

PSE&G ($180.06)

A typical PSE&G residential bill in New Jersey will be broken down into delivery charges and supply charges. Bills show the amount of kilowatt-hours used during the billing period, which determines the amount charged to the customer. For a household using 600 kWh in a month, they can expect to see around $79 in supply charges, $95 in delivery charges, and $6 in taxes, equating to roughly 44% supply, 53% delivery, and 3% taxes.

Supply

The total amount charged to a customer depends on the time of year, amount of electricity used, and - for customers who opt into time-of-use pricing - time of day of use. PSE&G separates their rates into a summer and winter rate period. Customers using 600 kWh or less per month are charged higher rates in winter months compared to summer months, but for customers using over 600 kWh, the summer rate is higher than the winter rate. The cost of transmission is recouped in the supply line, not the delivery line on the bill, and is a per kilowatt-hour charge. Although utility companies build out transmission lines, there are also specific transmission developers who build lines, so these charges are not lumped in with delivery. Transmission lines also affect the ability of supply to get to utility service areas, and are therefore added in with supply.

In New Jersey, supply charges are determined through the Basic Generation Service (BGS) Auction. In the BGS Auction, utility companies bid to procure electricity supply through the PJM market for their customers who do not purchase electricity through ESCOs.

Delivery

On the delivery side of the bill, the total amount charged also depends on the time of year and the amount of electricity used. As with supply, PSE&G separates their rates into a summer and winter rate period for delivery. Winter charges are about half of summer charges for customers using under 600 kWh, but for customers using over 600 kWh, the summer delivery charge increases while winter stays the same. PSE&G charges a monthly service charge to customers, which covers day to day operations and employee wages that gets factored into the total delivery charge.

Taxes/Public Benefit Charges

Included in taxes are charges that support various programs that the state administers. Charges include a Societal Benefit Charge, Non-utility Generation Charge, Solar Pilot Recovery Charge, Green Programs Recovery Charge, and Zero Emissions Certificate Recovery Charge. The Societal Benefits Charge is the largest portion of the taxes section, and covers low income, energy efficiency, and renewable energy programs.

Eversource ($211.38)

A typical Eversource residential bill in Connecticut will be broken down into supply, transmission, local delivery, and taxes, including public benefits charges. It will show the total amount due, the total amount of kilowatt-hours used, and specific charges calculated on usage during the period. A typical Eversource bill will roughly be 30% supply charges, 42% delivery, and 28% taxes.

Supply

In Connecticut, supply rates change twice a year, on January 1 and July 1. These costs are passed through the utility — meaning the utility company does not make a profit on them. Instead, supply costs are based on the system costs of the ISO. There are several different supply rates offered. The standard, non-time-of-use rate is higher from January through June and lower from July through December. Eversource customers can choose to use time-of-use rates, which charge more during peak hours (when demand is highest) and less during off peak hours.

Delivery

Local delivery has a fixed monthly charge, which covers Eversource’s day to day operations. Other charges, such as ​“system improvement” charges, are used to maintain and upgrade the distribution system. There is also a Competitive Transition Assessment (CTA) charge, which has been in place since Connecticut deregulated its utilities. This charge ensures continued cost recovery for the utility. Transmission costs are shared between all customers within the 6-state ISO-NE.

Taxes/Public Benefit Charges

There are two types of public benefits charges in Connecticut, the Combined Public Benefits Charge and the Federally Mandated Congestion Charge (FMCC). The Combined charge includes system benefits charge and a conservation and load management charge, which go towards energy efficiency programs. The FMCC includes the Millstone Energy Contract, Distributed resource programs, renewable energy contracts, and renewable energy credits.

The Millstone Energy Contract is a public benefit charge unique to Connecticut. The Millstone Energy Contract was authorized by the state General Assembly in 2017 and requires all Electric Distribution Companies (electric utilities) within the state to purchase half of the output of the Millstone Nuclear Power Plant. The contract allows Millstone to compete against cheaper renewable resources such as wind, solar, and hydroelectric power and remain operational. As of 2024, the Millstone Contract accounted for over three quarters of the public benefits costs on customer bills.

PSE&G Long Island ($176.83)

A typical PSE&G Long Island residential bill in New York will be broken down into delivery charges and supply charges. A bill will show the amount of kilowatt-hours used during the billing period, which determines the amount charged to the customer. For a household using 600 kWh in a month, they can expect to see around $76 in supply charges, $90 in delivery charges, and $11 in taxes, equating to roughly 43% supply, 51% delivery, and 6% taxes.

Supply

In New York, the power supply charge can vary month to month. In October 2025, the supply charge was about $0.123/kWh. This price is set through the NYS Public Service Commission and is based on market prices in New York. PSE&G Long Island also charges a Daily Service Charge to cover base expenses.

Delivery

On the delivery side of the bill, PSE&G Long Island is transitioning residential customers to a ​“time of day” rate. This rate varies based on the time of day - during times when demand is highest (3pm to 7pm), electricity is more expensive, and less expensive when there is less demand. The rate also changes depending on the time of year, with a higher rate between June and September and a lower rate between October and May.

Taxes/Public Benefit Charges

Taxes that support public policy initiatives are collected in both the supply and delivery sections of the bill. In the Delivery section, there are several NYSERDA programs including: energy efficiency and building electrification, Clean Energy Fund (CEF), and energy storage programs. There is also a utility energy efficiency and building electrification charge, an electric vehicle program charge, and a distributed energy resource program charge. In the supply section, there is a Clean Energy Standard (CES) Charge, NYSERDA energy storage charge, and a transmission upgrade charge. Taxes in the delivery charge add up to about 2.5% of the total bill, and about 3.8% in supply for a total of 6.3% of the total bill.

Con Edison ($100.36)

A typical Con Edison residential bill in New York will be broken down into delivery charges and supply charges. A bill will show the amount of kilowatt-hours used during the billing period, which determines the amount charged to the customer. For a household using 600 kWh in a month, they can expect to see around $92.50 in supply charges, $126.30 in delivery charges, and $6.77 in taxes, equating to roughly 40.5% supply, 55.3% delivery, and 5.2% taxes.

Supply

The supply charge on a Con Edison bill is a pass-through cost, so they do not make a profit on it. The supply charge is based on market conditions within the New York Independent System Operator, or NYISO, the state’s grid operator.

Delivery

Con Edison charges a basic service charge, which covers basic infrastructure and customer services. Con Edison offers a standard rate as well as time of use rates. The time of use rate varies greatly in the summer, with daytime rates around 32 cents per kWh and nighttime rates only around 2.5 cents per kWh. All other months, daytime rates are around 13 cents per kWh, closer to the standard rate of around 16 cents per As property taxes on energy infrastructure are an operational cost for utilities, they are incorporated in the delivery costs. In New York City, energy infrastructure has its own property tax class (Class 3), which represents a high share of the total citywide tax revenue compared to its market value (6% of total revenue compared to 3% market value). These costs are passed through to ratepayers.

Taxes/Public Benefit Charges

Much like PSE&G Long Island, taxes that support public policy initiatives are collected in both the supply and delivery sections of the bill. In the Delivery section, there is a NYSERDA Clean Energy Fund charge as well as a utility energy efficiency and building electrification charge, and an electric vehicle program charge. In the supply section, there is a Clean Energy Standard Charge and a transmission upgrade charge. Taxes in the delivery charge add up to about 3.1% of the total bill, and about 2.1% in supply for a total of 5.2% of the total bill.

Electricity costs can shift dramatically in a given year. While delivery rates can only be changed through a utility tariff filing, where the state board of utilities reviews and must approve the rate change, supply rates can vary depending on market conditions.

Over the last decade, electricity prices have overall been on the rise throughout the region. Between 2016 and 2025, the average amount of cents per kilowatt-hour charged for electricity annually in each state in our region has seen an increase of about 59% in Connecticut, 32% in New Jersey, and 45% in New York. The annual average price of electricity, however, does not reflect the highest prices in the year. When looking at the rate of change specifically for June power bills, that increase is 30% in Connecticut, 55% in New Jersey, and 48% in New York. New Jersey most recently saw a 25% increase from June 2024 to June 2025, and Connecticut had two years in a row with increases over 20%, followed by a year of a nearly 20% decrease (2022-2024).

So why do electricity prices rise and fall? For each section of the bill, there are different factors that can affect what customers pay.

• Supply
  Since the supply charge is a pass-through cost, utility companies have no say over this section of the bill. Supply charges are wholly based on market conditions both within the ISO and in the global market. Supply charges can increase or decrease based on fuel volatility (the price of natural gas, oil, coal, or uranium), the number of power plants with capacity on the grid, and the degree of demand for electricity.
• Delivery
  The delivery charge on a bill is how a utility company ensures a profit, pays their employees and makes capital expenditures. There are two main factors that go into the delivery charge - transmission and distribution. Costs for both include maintaining and repairing infrastructure (including ongoing and emergency repairs), congestion of lines, and transmission upgrades and investments. The necessary costs to modernize the grid are reflected in the delivery charge. To increase delivery charges, utility companies must submit tariffs which are then reviewed by the state board of utilities and are either accepted, rejected, or accepted with revisions.
• Taxes
  Taxes - including public benefit charges - can be put into either section of the bill, but can vary depending on state leadership and policy goals. Some public policy initiatives are short-term, while others are long lasting. While they are not as prone to fluctuation as supply and delivery charges, new policies - or the abandonment of such policies - to advance societal benefits in states around energy (such as energy efficiency or ratepayer assistance) can lead to shifts in this portion of the bill.

Electricity prices are rising across the country, and have been for several years now. The chart above shows how electricity prices have increased in our region over the past ten years, despite some variations from year to year. Fluctuations generally have to do with seasonal demand and the cost of fuel.

The electricity bill increases we are experiencing now, nationally, have to do with several factors, namely the increased cost of energy, increased demand, supply constraints, and the increased cost of transmission and distribution infrastructure.

The cost of fuel that feeds power plants (energy) is one of the most significant aspects that affect the supply charge of an electric bill. Over the last decade, prices for natural gas and oil have fluctuated significantly, causing volatility in energy markets. In 2022, Russia’s invasion of Ukraine sent US natural gas prices skyrocketing, as the United States exported more natural gas to Europe as those nations put sanctions on Russian gas, limiting US supply. While prices stabilized shortly after, they have started to rise once again. Since the largest share of the electricity in the United States - 40% - is produced from power plants burning natural gas, electricity prices are particularly vulnerable to volatility in the natural gas market. Natural gas prices are expected to increase further in 2025.

The shifting balance between supply and demand is another factor causing increases in the supply line of an electric bill. In simple terms, as demand for electricity increases, if supply does not increase in parallel, then costs go up. Since the pandemic, there has been a significant, largely unpredicted, growth in electricity demand from data centers powering AI as well as electrification of buildings and vehicles. In PJM, the Regional Transmission Organization serving New Jersey, data centers currently account for 4% of total energy demand and are expected to grow to 12% of total demand by 2030. In PSE&G’s service territory, interconnection requests for data centers and other large load projects have increased to 4,700 MW, up from 400 MW from 2024 to 2025. Data centers are expected to be a driver of growth in New York as well, with demand expected to increase from 28,990 MW in 2024 to 34,500 MW by 2035.

At the same time that demand is growing, the capacity of power plants on our grid has remained relatively stagnant, despite renewables replacing fossil fuel retirements at pace. Additionally, current lead times for new natural gas turbines for power plants is around three to seven years, limiting the availability of new fossil fuel supply. As a result of the supply of energy demand not keeping up with the rise in demand, prices set in the energy markets have risen. Those prices are reflected in utility bills, as the energy utility companies have to buy is more expensive. The charts below show each state in our region’s total summer energy capacity over the last ten years, or the amount of power each state can produce.

As previously mentioned, the delivery line of an electricity bill is how utility companies make money for their operations. Since utilities are investor owned companies, they bake in their profits into the electric bill to have a high return on equity. Profits are made through a return on investment, mainly transmission and distribution infrastructure maintenance and upgrades. Since the COVID-19 Pandemic and even before, the cost of the necessary parts to build electric infrastructure has increased significantly, with even longer lead times. Transformers are one of the most critical pieces of infrastructure, and have increasingly become more difficult to come by. According to analysis by Wood Mackenzie, transformer demand has increased 7% since 2020, with costs increasing up to 95% and lead times increasing from a few weeks to over a year. The US also imports around 80% of transmission level transformers and around 50% of distribution level transformers - recent tariffs from President Trump have further increased those. Transmission infrastructure in the region is aging, and desperately needs to be replaced - over 50% of transformers in service are older than their expected service life, and, in New York alone, over 80% of transmission infrastructure is older than 40 years. These factors have significantly increased costs of utilities, and therefore costs for ratepayers. In Connecticut alone, transmission costs have grown over the last ten years to now make up 11% of customers’ bills. A major concern for regulators is that utility companies are ​“gold plating” aging infrastructure - adding unnecessary investment on top of necessary investment to get a higher return.

Aside from individual efforts to incorporate efficiency measures and use less electricity overall, the following policy approaches can help to minimize fluctuations in rates, if implemented.

Build planned clean energy projects and incentivize future projects

Completing planned clean energy projects - including offshore wind and Battery and Energy Storage Systems - is critical to lowering electricity bills in the long term. Not only are they critical to lowering energy costs, they are critical to the reliability of the energy grid.In New York, for example, Empire Wind and Sunrise Wind, two offshore wind farms off the coast of Long Island are critical to system reliability - if those projects are further delayed or cancelled, concerns about significant reliability constraints in New York City and on Long Island could be realized, according to the NYISO. Having a reliable, stable grid is a key cornerstone to stable electricity prices - while the stability of the grid itself does not lower prices, the instability of the grid certainly raises prices.

Offshore wind is a key resource to move toward more predictable and lower electricity costs. Unlike natural gas, coal, uranium, and petroleum, offshore wind does not depend on a fuel that is subject to volatile markets. Wind is abundant and free. As a result, most offshore wind power purchase agreements have locked-in rates, making those rates inflation proof as well. A May 2025 study from Aurora Energy Research found that if Empire Wind, Sunrise Wind, and South Fork Wind were all in operation in 2022, they would have saved New York electricity customers $77 million in a single winter month. Since natural gas prices often peak in the winter due to shared use for electricity and heating, offshore wind is particularly critical for keeping prices low in these months. An additional report from Daymark Energy Advisors found that 3.5 GW of offshore wind online this past winter could have resulted in $528 million in savings for the ISO New England area and up to $212 million in Massachusetts alone.

Offshore wind is not the only renewable energy source that can lower energy costs nationwide. Our grid needs more energy, and we can either choose more expensive, price-volatile fossil fuels or more stable and price competitive renewable energy resources. According to IRENA, the International Renewable Energy Agency, over 90% of worldwide renewable energy projects in 2024 were more cost effective than fossil fuel projects. This is in part due to renewable energy technologies rapidly dropping in price - solar, wind, and energy storage systems have all decreased in cost significantly since 2010. According to that same report, Solar was over 40% cheaper than the lowest cost fossil fuel, and onshore wind was over 50% cheaper.

That data is consistent in the United States, and states that have a higher share of renewable energy have more resiliency to rising electricity rates. According to a POLITICO analysis of US Energy Information Administration data, states that have a higher than average share of wind and solar in their electric supply have been more insulated from the rising rate than the rest of the country. This undermines the current messaging from the Trump Administration Department of Energy that renewable energy is increasing rates, rather than stabilizing or decreasing them.

Renewable energy projects can also be built much faster than new natural gas power plants, particularly given a supply chain bottleneck in new natural gas turbines. Solar farms can be built anywhere from eight months to five years, depending on the size and permitting requirements. South Fork Wind took about ten years from the lease sign date to date of commercial operation, but construction and permitting was only about five years of that. Empire Wind and Sunrise wind are estimated to have similar timelines. With lead times for new natural gas turbines reaching up to seven years, existing offshore wind projects that have already started or completed permitting can be completed before a company even receives a natural gas turbine.

Invest in Transmission and Distribution Infrastructure

Transmission and distribution investments are another key to long term electricity rate stabilization. Our grid infrastructure is old, and desperately needs to be upgraded. While upgrades will lower costs in the long run by avoiding emergency repair costs which unpredictably raise rates, they will raise costs in the short-term, but are worth the investment.

In addition to replacing outdated grid infrastructure, the US needs to expand the transmission network by 60% by 2030 to meet the rising demand for electricity. Grid Enhancing Technologies (GETs) can help save billions in congestion costs and offset the need for new transmission infrastructure by maximizing the efficiency of transmission lines through upgrades, however new transmission is still needed.

Demand response is another method for reducing electricity costs. Demand response allows a grid operator to voluntarily reduce electricity use during times of peak electricity demand, lowering the strain on the grid. The NYISO is growing demand response in its service territory, with hopes that it can help meet rising demand and reduce costs in the summer.

Virtual power plants are a new method for increasing electricity supply in times of high demand. Virtual power plants are small energy generation resources within a grid operator or utility service territory, such as rooftop solar, energy storage, and electric vehicles, that the grid operator can pull power from to help supply the grid in peak times. Virtual power plants keep costs down by pulling from resources not typically considered in the grid’s energy mix, reducing overall costs to the customer.

Reform Energy Markets and ISO Processes

Long term energy prices could potentially be stabilized by market and ISO reform. Energy markets and the process to bring new energy generation onto the grid are outdated and have contributed to dramatic rate increases in New Jersey and other states on the PJM grid. Lawmakers should work with the regional grid operators and utility companies to create a new process that fits with a modern energy system that has an increasing share of renewable, distributed resources.

Better Manage Data Center Growth

Given the explosive growth of power-hungry data centers connecting to our grid, and the resulting rate increases from spikes in demand, state officials and grid operators need to consider potential pathways to reduce demand and improve the connection process. This may include requiring data centers to bring their own generation, connect to clean generation, or to enroll in demand response programs where grid operators can reduce the draw of power from large loads during times of peak demand.