By Mark Jaffe, EUCI energy writer
Following a five-year trend spurred by investments, rising natural gas prices, and growing demand, the year-over-year national average electric revenue rose 9% to 14.6 cents a kilowatt-hour (kWh) in February 2026, according to the U.S. Energy Information Administration (EIA).
Forty-three states and the District of Columbia saw increased revenue per kWh compared to February 2025 with the biggest increases in Virginia at 26.3% and Ohio at 21.9%. Both states have been home to data-center building booms.
The states – excluding Hawaii and Alaska – with the highest average revenue per kWh are Connecticut at 27.6 cents, Massachusetts at 27.06 cents, and Maine at 26.67 cents.
State regulators approved rate increases totaling $4.4 billion in 2022 and $9.7 billion in 2023. Utilities entered 2026 with $14 billion in pending rate increase requests, according to S&P Global.
Residential electricity costs have risen nearly 30% since 2021 “significantly outpacing inflation,” a study by PowerLines, a consumer-oriented group focused on modernizing utility regulations, said.
“The predominant driver of recent utility bill increases has been rising transmission and distribution costs, rather than generation costs. Ballooning distribution system expenses have placed particular upward pressure on utility bills,” the PowerLines report said.
In 2023, distribution-related costs made up 44% of all utility capital expenditures and 35% of all utility costs, the report said.
A retail electricity price trends report by the Lawrence Berkeley National Laboratory (LBNL) found that from 2024 to 2025, distribution costs increased retail prices in 22 states, with some linked to storm and wildfire damages.
For example, in Florida a 1 to 3 percent kWh surcharge was placed on bills for storm cost recovery. Central Maine Power in 2025 increased its storm recovery surcharge by nearly 40% to 2.5 cents a kWh, according to the LBNL study.
Wildfire mitigation added costs to both the distribution and transmission systems, adding 5 cents a kWh to the charges by California’s Pacific Gas and Electric and 1.5 cents a kWh for Hawaii Electric and Xcel Energy’s Colorado subsidiary.
“Recent distribution and transmission investments have been driven by replacement and hardening, though with growing emphasis on expansion,” the study said, adding “one of the reasons for growth in distribution and transmission costs is that equipment prices have grown well-above the pace of inflation.”
In the year-over-year comparison, rising natural gas prices also played a role in the price increases as natural gas-fired generation provides 43% of the country’s electricity – the largest single source.
Natural gas prices at the Henry Hub jumped 22.6% to $3.11 per million British thermal units (BTUs) June 2025 from June 2024, and the price this March was $3.04 per million BTUs, according to the EIA.
This comes at a time when demand for electricity is increasing. From 2010 to 2019, electricity demand grew at an average compounded rate of 0.2% a year. Between 2019 and 2025, it was up to 1.1% a year, according to the LBNL.
Between 2024 and 2025, the growth rate rose to 2.1%.
Demand is being spurred by data centers, manufacturing, and electrification, including electric vehicles and heat pumps, the PowerLines report said.
In terms of sectors, transportation saw the highest increase year-over-year at 23.6% to 16.78 cents a kWh, followed by the commercial sector at 10.7% to 14.37 cents and then the industrial at 8.6% to about 9 cents a kWh, according to the EIA.
The residential rate rose 7.4% to 17.65 cents a kWh.
The transportation sector also had the largest increase in retail sales between February 2025 and February 2026, up 4.0%.
“The U.S. electricity system is facing an unprecedented set of pressures,” the PowerLines study said. “One of the most critical challenges it must confront is rising utility bills. Energy affordability is essential for a robust economy.”
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