Electricity Price Escalation Pressures Affordability

Definition

Average residential retail electricity prices are projected to be approximately 4.5% higher in 2025 compared to 2024, with ICF forecasting prices could increase almost 20% by 2028 in some regions like Texas and New England. This price escalation creates regulatory and political pressure on utilities, as CFOs face rate case denials, customer activism, and state legislative intervention. Multiple states (Virginia, Georgia, California) introduced bills in 2025 requiring state energy regulators to analyze and reduce data center development's energy cost burdens to consumers, threatening utilities' ability to fully recover infrastructure costs. Rising prices also increase bad debt (customer non-payment) and churn risk as residential customers seek to reduce consumption. Utilities must invest heavily in new generation, transmission, and distribution while simultaneously absorbing costs that regulators will not allow into rates.

Why This Matters

Advanced rate design consulting, customer segmentation and profitability analytics, demand-side management software, cost allocation modeling platforms, regulatory strategy advisory

Affected Stakeholders

Chief Financial Officer / Finance Manager, General Manager / Operations Director

Related Business Risks