Utility bills grew faster than overall inflation over the summer, a Bank of America report found, as summer heat, modernization of the US power grid, and the data center build-out contribute to higher costs.
There could be some near-term relief ahead due to a warmer winter, BofA said, but bill pressure is expected to stick around for some time.
Bank of America found that in August, the average utility bill price increased 5.3% year over year, outpacing inflation in electricity and piped gas prices, which rose 4% from a year ago, following the hottest summer on record in the US.
Energy bills accounted for roughly 3% of total household spending, as of 2024.
Reshoring manufacturing, reindustrialization, and a significant need to replace infrastructure in the US are driving costs higher in certain areas of the US. But utility bill growth varies across the country.
In the Northeast, investments in the energy grid and capacity have led to higher prices. Whereas, regulatory changes and the removal of hurricane recovery surcharges led to lower prices in Florida.
Detroit, Baltimore, and Washington, D.C. saw the highest increases in energy costs from June to August of this year, with utility bills in those cities rising 10% year over year. Meanwhile, bills actually declined in San Jose, Orlando, and Tampa.
The US Energy Information Administration’s August 2026 short-term energy outlook projects a 4% increase in commercial and industrial electricity consumption, necessitating new grid investments.
“Accommodating this growth will likely require ongoing investment in grid capacity and power generation, and some of these costs may be passed on to consumers through higher energy bills,” Bank of America said.
Concerns about higher bills have contributed to the bipartisan backlash against data center construction emerging in the US. Seven in 10 Americans now oppose data center construction in their local area, a Gallup poll found earlier this year.
Daniel McGahn, the CEO of energy technology company American Superconductor, told Yahoo Finance that new data centers aren’t typically the sole driver of higher utility bills, however.
“A lot of what we see in the build out of all this infrastructure, be it for data or be it for chips, or be it for manufacturing, most of the time … that’s part of the cost of the project, of bringing that capacity online,” McGahn said. “It’s not something that’s necessarily passed on to you or I as a ratepayer.”
Although utility bills have been rising, BofA noted that some near-term relief may be on the horizon due to the El Niño weather pattern. El Niño causes a temporary warming of the Pacific Ocean, which changes global weather patterns. Those warmer temperatures could potentially lower energy bills due to lower demand.
