Electricity Prices Are Rising Thanks To Tariffs, Clean Energy Cuts, AI

Topline

Electricity bills have increased almost 10% since the start of the year and could rise another $170 per year for households by 2035 thanks to the repeal of clean energy tax credits, new tariffs and rapid expansion of electricity-hungry data centers to fuel a boom in artificial intelligence, multiple reports have shown.

Electricity transmission towers.

Getty Images

Key Facts

Residential electricity bills have increased by almost 10% since President Donald Trump was sworn in for his second term as president, according to data from the Energy Information Administration, rising from 15.95 cents per kilowatthour in January to 17.47 cents in May, the latest data available.

The cost of electricity has risen 5.5% over the last 12 months, according to the latest consumer price index data, almost twice as much as the overall cost of living (up 2.7%).

Trump has repeatedly promised to lower utility bills, but multiple reports released this summer blame his moves imposing new tariffs, cutting clean energy sources and supporting the expansion of data centers as reasons for the spikes in price.

Climate think tank Energy Innovation estimates energy provisions in the One Big Beautiful Bill Act, signed into law July 4, will increase wholesale electricity prices by 74% over the next 10 years, leading to a household energy cost increase of $170 annually by 2035.

Tariffs on steel, aluminum and their derivatives stand to increase the cost of construction and maintenance on transmission lines, substations and power plants, likely to be passed onto customers over time, and energy imports from Canada and Mexico are also subject to tariffs.

Trump’s support of AI—he has vowed the U.S. will become “the world capital of artificial intelligence and crypto”—is also fueling the rise of power-hungry data centers, sending the demand for electricity (and its price) soaring.

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Surprising Fact

The EIA projects data centers and other commercial users will surpass residential customers in use of electricity for the first time next year.

Key Background

The bill Trump signed in July stripped away federal support for cheap solar and wind energy production and moved to expand domestic fossil fuel production. The bill phases out tax credits for solar and wind, often now cheaper than gas or coal, and forces utilities to rely more heavily on existing, expensive and nonrenewable power sources. The bill is in line with Trump’s stated goals—to use oil, gas, coal and nuclear power to meet the country’s growing energy needs—and includes moves like opening up federal lands and waters to oil and gas drilling and slashing royalties that producers pay the government for pumping oil and gas on those lands. Trump has long blasted solar and wind warms, for their visible footprints, the requirement of more land than nuclear, natural gas or coal and their vulnerability to natural disasters, calling wind farms “unsightly” and “garbage.”

Crucial Quote

“I don’t want windmills destroying our place,” Trump said in June. “I don’t want these solar things where they go for miles and they cover up a half a mountain that are ugly as hell.”

Big Number

13,939. That’s how many megawatts of planned energy generation, enough to power 8.4 million homes, have been lost due to energy projects that were canceled or delayed since Trump’s election, according to a new report from advocacy group Climate Power.

Contra

Energy Secretary Chris Wright told Politico in an interview published Tuesday that cuts to solar and wind power projects are not causing electricity costs to spike. He said he knows electricity prices are rising, but blamed Obama-Biden policies that resulted in taxpayer money flowing into clean energy projects: “And who’s going to get blamed for it? We’re going to get blamed because we’re in office.”