The $560 Billion Energy Question

For decades, US electricity prices were remarkably stable. Efficiency gains, flat demand, and periodic government support kept costs in check. That era is coming to an end.

The growing cost of powering the US

In 2025, utilities had an estimated total revenue requirement of $540 billion. By 2035, that number is on track to reach $1.1 trillion—a shift from roughly 1.5% of US GDP to 2.5%. Multiple forces are hitting at once: deferred investment in critical infrastructure improvements, regional service gaps that can no longer be ignored, data center power demand, and a rollback of federal subsidies that previously relieved some pressure. Utilities now face a $560 billion funding gap.

Beyond rates: Where utilities can unlock value

Rate increases alone won’t cover such a large shortfall. The opportunities lie in a broader set of levers.

Operational efficiency and smarter capital deployment are essential. But, together, they only stand to address between $60 billion and $140 billion of the gap. Bigger gains will come from ensuring large new users pay their true cost of service, finding outside partners to help fund new infrastructure, and building the regulatory and public case for rate increases tied to real value.

That last point matters. Utilities have struggled to tell a clear, compelling story. Customers don't always connect higher electricity bills with the value of greater reliability and cleaner energy—or, in some cases, offsetting savings like spending less on gas with an electric vehicle. Expanding the conversation beyond rate increases can shift the narrative.

The window to act is closing fast

The stakes are clear. Every year of delay steepens the curve and makes price hikes larger and more difficult for consumers to accept. The utilities that move now on efficiency, on cost allocation, and on narrative have a path through. Those that wait will face a widening gap and a tougher path to close it.