Why Are Electricity Prices Rising? 2026 Rate Increase Guide

Electricity prices across Texas, Ohio, Pennsylvania, and Massachusetts have increased substantially through 2025.

Key statistics: Residential rates are rising 15% to 25% compared to 2024 averages. Multiple interconnected factors drive these increases, and delivery charges affect all customers equally.

Price drivers include: Fuel costs, infrastructure investments, and regulatory changes.

Good news: Competitive supply markets in deregulated states still offer opportunities to reduce the generation portion of electricity costs. Check your current rate against market offers at ElectricRates.org to see if you're overpaying.

Natural gas remains the primary fuel source for electricity generation throughout the Eastern United States.

2025 natural gas price increase: ~30%

Causes of increased natural gas prices: Increased export demand, reduced production in some regions, and colder-than-average winter weather increasing heating demand.

How this affects you: Natural gas plants often set the marginal price in wholesale electricity markets. Higher gas prices translate directly into higher electricity costs. This affects both utility default service AND competitive supplier offers.

When gas costs more, electricity costs more. Simple as that.

Utility companies are investing billions in grid modernization across Texas, Ohio, Pennsylvania, and Massachusetts.

Current infrastructure projects: Replacing aging equipment, building new transmission lines, implementing smart grid technology, and hardening infrastructure against severe weather.

Cost impact: Delivery charges increased 10% to 15% in 2025. All customers pay these charges regardless of supplier choice, since capital investments get recovered through delivery charges.

Yes, these upgrades make the grid more reliable. But someone has to pay for them, and that someone is you.

The transition toward renewable energy affects electricity pricing through multiple mechanisms.

Renewable energy investments: Solar infrastructure, wind projects, and battery storage systems.

Compliance cost drivers: REC requirements in Massachusetts, growing portfolio standards in Ohio and Pennsylvania, and coal and older natural gas plant retirements reducing capacity.

Market impact: Reduced generation capacity can increase wholesale prices during high-demand periods. Compliance costs get passed to customers.

Renewable costs dropped 90% over the past decade. But building all that new infrastructure still costs money upfront.

Electricity demand has grown in 2025 due to several factors.

Demand growth drivers: Economic activity recovery, electric vehicle adoption, data center expansion, work-from-home patterns persisting, and electrification of heating and transportation.

Impact on prices: Industrial and commercial growth pressures generation capacity. Peak demand during extreme weather spikes wholesale prices. Power plants operate more frequently, increasing fuel consumption and maintenance costs.

More demand means higher prices across the board.

State regulatory decisions in 2025 have contributed to electricity price changes across the region.

Key regulatory changes: Rate cases approved allow utility delivery charge increases to fund infrastructure and operational costs. Default service procurement process changes affect non-shopping customers. PJM capacity market reforms increased capacity charges in Ohio and Pennsylvania. Environmental compliance requirements add costs too.

Result: Suppliers must pay higher capacity charges and pass them through to customers. Older generation facilities are either investing in pollution controls or retiring.

Supply chain constraints and inflation have increased costs for utility operations.

Affected equipment: Transformers, power line components, specialized electrical equipment, and construction labor.

Current status: Extended lead times. Higher prices than historical norms. Supply chain pressures eased from 2022 peaks, but prices remain elevated.

These increased operational and maintenance costs get reflected in utility delivery charges and affect suppliers' operating expenses.

Despite rising prices, consumers in deregulated markets retain control over their generation supply costs.

Compare rates and save: ElectricRates.org compares rates from all licensed suppliers in OH, PA, and MA. Enter your ZIP code and you'll see current offers in under 2 minutes.

Additional strategies worth considering: Locking in fixed rates during periods of relative price stability protects you from future increases. Energy efficiency improvements reduce usage and total costs regardless of rates. Time-of-use plans let you shift usage to cheaper off-peak hours if your schedule allows. And periodically reviewing your current rate ensures you're not overpaying without realizing it.

Official tools like Ohio's Apples to Apples and Pennsylvania's PAPowerSwitch also reveal options below current default rates.