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Electricity is a public good, dating back to when rural electrification was a pressing need for the nation during the New Deal era. Yet control over this essential service today rests largely in the hands of private monopolies known as investor-owned utilities (IOUs), which provide power to nearly 70 percent of utility customers in the U.S.
These monopolies are regulated at the state level by public utility commissions, which are responsible for setting rates. Utilities must justify any rate increases and convince regulators of the need for their actions. But 2025 may be the year that this regulatory framework collapses under its own contradictions.
In just the first half of the year, IOUs requested approval for an unprecedented $29 billion in additional revenue. They cited growing electricity demand, including from data centers powering artificial intelligence, needed upgrades to aging infrastructure, and mandates to decarbonize in several states. Yet rate hikes have also translated into skyrocketing CEO compensation and record-breaking profits for shareholders. And in many parts of the country, IOU rates are rising much faster than those of their municipally owned counterparts.
This has put unbearable weight on customers. Electric bills are increasing at twice the rate o inflation on average. More than 52 million Americans were unable to pay their electric bills at least once last year, and on an annual basis, roughly three million people who cannot afford these bills have their electricity shut off.
The myriad factors driving up electricity demand are “actually just shining a spotlight on the fundamental design of the utility system,” Isaac Sevier, founder and executive director of Public Grids, told the Prospect. And that design is badly broken, with public utility commissions either too confused or too captured to resist an onslaught of IOU pressure to approve rate hikes.
Sevier believes this necessitates a rethink of how utilities deliver power in the U.S., and how to protect those who pay for it. He wants to restore a promising and proven alternative—public power. The movement to reclaim democratic control over utilities has cemented itself in communities across the country. In their outreach, public power advocates have connected soaring electricity prices with the need to trigger a paradigm shift in the fundamental design of the utility system, one that decouples investment planning from shareholder profits.
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