As the “bomb cyclone” and blizzard-like conditions bear down on the Upper Midwest and Great Lakes area this week, many Americans are cranking up the heat trying to stay warm. The cost of boosting the thermostat will keep rising in 2026 for a myriad of reasons.
Why electricity rates are higher
Natural disasters, such as hurricanes and wildfires, along with the replacement of aging equipment and renewable-energy initiatives, are among the reasons. The federal Energy Information Administration expects electricity rates for residential customers to rise by 4.2% in 2026, following a nearly 5% increase in 2025.
Electricity costs are higher than inflation, most recently reported at a 2.7% annual rise in November, according to the latest consumer price index report. In the same report, the energy index, including a variety of types, rose at an annual rate of 4.2%, while electricity alone rose by 6.9%.
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Data center debate
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The average bill for home heating could run $995 for the months of November through March, according to the National Energy Assistance Directors Association.
There have been recent concerns that the boom in data centers powering artificial intelligence in the United States will push prices even higher. U.S. Energy Secretary Chris Wright recently refuted that notion at the North American Gas Forum. He argues that more data centers will lead to soaring electricity production and thus make the utility cheaper.
“When people say, ‘AI is going to drive up my price of electricity,’ it’s actually the opposite,” Wright said.
The Wall Street Journal, however, cites a recent Carnegie Mellon study showing electricity bills could rise by 8% in the U.S. because of data center growth. As a result, some utilities are urging Big Tech companies such as Google and Microsoft to pay higher fees to link their data centers to local power grids.
Political fallout
The rising price of electricity was a key campaign issue in the 2025 race for governor in New Jersey. Power rates had risen year over year by more than 20% in some parts of the state. Democrat Mikie Sherrill prevailed after calling for a freeze on utility rates and for building cheaper and cleaner power.
In Georgia, power rate increases led to the ousting of two Republican incumbents on the state utility commission. Such costs are generally decided at the state level.
What’s next
A colder-than-normal winter in parts of the country, combined with higher costs for natural gas and electricity, will lead to higher bills this winter, according to the National Energy Assistance Directors Association. It predicts a 9% increase overall from November to March.
