Key Takeaways
Residential electricity prices increased 25% under Joe Biden’s presidency, and they are continuing to increase as his policies have not yet been replaced because it will take time for the incentives and regulations implemented by his administration to phase out.
Electricity prices are also rising due to increasing demand from AI data centers and Biden’s policies to increase electrification.
Democrats are blaming the Trump administration for increasing electricity prices because of the One Big Beautiful Bill Act and the administration’s hostility to wind and solar power, particularly for very expensive offshore wind, which is three times the cost of onshore wind.
Onshore wind and solar power are not as cheap as many naïve politicians and their constituents believe, due to costs that are hidden by the methodology they use.
Backup power costs and increased infrastructure costs are not attributed to wind and solar power, despite being significant system costs created by their use.
Residential electricity prices increased 25% while Joe Biden was president, and they are continuing to increase. This continuation occurs because there is a lag for the Trump administration’s policies to take effect due to the time it takes to enact legislation, phase in changes, and finalize new or modified regulations. According to Massachusetts Institute of Technology professor Christopher Knittel, “Trump’s effects on the rate changes won’t take place until after the midterms.”
The net-zero carbon transition forced on constituents by the Biden administration and leaders of Western countries was supposed to not only make electricity generation free from carbon but also produce the benefit of lower energy prices. Naïve politicians believed that to be the case because the marginal costs of wind and solar power are less than the marginal costs of coal and natural gas-generated power. But the measure that planners and politicians should have used is system-wide costs, which include the cost of backup power and the increased infrastructure required for intermittent technologies.
Because wind and solar power can only produce electricity when the weather is conducive, they require backup power from natural gas, coal, or nuclear generators that operate 24/7, or from very expensive storage batteries that store excess electricity when available to use when the wind is not blowing and the sun is not shining. System costs include the cost of backup power and the cost of extra infrastructure needed to move power from sunny and windy sites that are frequently far removed from where power is needed. Natural gas and coal generators can and are located near demand centers and, thus, do not require the extra infrastructure that solar and wind units require.
In essence, due to the need for backup power, the use of wind and solar power is actually creating redundancy in the generating system, since the intermittent units have to be backed up by other reliable units. Furthermore, it increases the costs of the units used as backup because they have fewer hours of operation over which to spread their costs.
Wind and solar power are shown further favoritism by the massive subsidies they have been receiving for decades, and continue to receive, from taxpayers. Subsidies lower their levelized costs, which do not include backup power or the additional infrastructure costs required, and make it more difficult for fossil fuel and nuclear generators to compete, compounding the situation.
Electricity prices will continue to increase until the situation is corrected, which will take time, as the prediction from MIT’s Knittel indicates. The situation is further complicated by increasing electricity demand from artificial intelligence (AI) data centers and increased electrification pushed by the Biden administration and blue states, which is continuing. Converting buildings from natural gas to electricity and cars from petroleum to electricity only complicates matters by raising demand for electricity and requiring more generators to meet that demand.
Trump Gets Blamed for Rising Electricity Prices
According to E&E News, Democratic lawmakers have used town halls, press conferences, and social media posts to blame President Trump’s One Big Beautiful Bill Act (OBBBA) for increasing energy prices because of its phase-out of energy incentives from Biden’s climate bill, the 2022 Inflation Reduction Act. But if the OBBBA is the cause, why did residential electricity prices increase 25% under Joe Biden? And why are those prices still increasing when the phase-out from the OBBBA has not yet begun?
Besides the OBBBA provisions, Democratic lawmakers are accusing the Trump administration of hostility toward wind and solar as the cause of the rise in consumers’ utility bills. President Trump has taken action principally against offshore wind, withdrawing permits for projects approved by the Biden administration. Offshore wind is three times more expensive than onshore wind, according to the Energy Information Administration, even with the flaws in levelized cost methodology described above.
Via the Washington Free Beacon, Democrats also accused the Trump administration of increasing consumer costs by forcing the J.H. Campbell coal-fired power plant in western Michigan to remain online. Instead of costing consumers millions of dollars, as they had predicted, the plant has been profitable. The coal plant generated $33.7 million in revenue between late May and June 30, earning nearly $5 million in profit.
Analysis
With election season upon us, Democrats across the country are using rising electricity prices occurring alongside the OBBBA’s passage as a cudgel against Republican opponents. Reality, however, is much more complicated, as much of the increase in electricity prices results from policies enacted during the Biden administration and the increase in demand from AI, not from changes that have yet to take effect. Falsely, Democrats claim that wind and solar’s lower levelized cost of electricity means that bringing more of it onto the grid will lower electricity prices. As IER’s Tom Pyle explains in the Wall Street Journal, “Despite wind and solar growing from under 1% of generation in 2007 to roughly 17% of generation in 2024, retail rates haven’t fallen thanks to system-wide costs for backup power, balancing services and transmission lines. Meanwhile, U.S. states and European countries with aggressive renewable energy policies face significantly higher rates. California’s are among the highest in the country, and Britain’s industrial electricity prices are approximately four times as high as ours.”
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