We Didn’t Just Get Expensive Electricity. We Built a System That Makes It Inevitable.

Posted For: taxpayer22

Most Americans don’t think much about electricity until the monthly bill arrives.

It shows up quietly each month, but lately it lands with a thud. Heating your home can now cost hundreds more than it did just a few years ago. You’re using the same appliances and flipping the same switches. Nothing in your daily routine has changed — except the price. So what happened?

Looking inside the electricity system doesn’t feel like examining a machine. It feels more like being pulled into one — reminiscent of the famous scene in Modern Times where Charlie Chaplin’s factory worker gets swallowed by the gears he’s supposed to operate.

The American electricity market isn’t guided simply by supply and demand. Instead, it’s shaped by decades of accumulated rules — layers of regulation, subsidies, mandates, and accounting practices. Over time, those layers have created a system that steadily pushes costs upward and resists attempts to change course.

Several federal environmental regulations play a significant role in rising electricity prices — often more than tariffs or the expansion of energy-hungry data centers. One example is a policy called Construction Work in Progress, or CWIP.

As recent policy analysis explains, CWIP fundamentally changed who pays for major infrastructure projects in the United States.

Before the 1970s, utilities had to complete construction on a power plant before they could charge customers for it. Companies bore the financial risk. Investors funded projects, and if a project succeeded they earned a return. If it failed, they absorbed the loss.

But during the inflation crisis of the 1970s, the cost of building power plants — especially nuclear plants — soared. Utilities argued they could not wait years to recover their costs. In response, state regulators began allowing companies to bill customers while plants were still being built.

CWIP shifted investment risk away from investors and onto ordinary consumers. Today, many electricity bills include charges for projects that are still under construction — or that may never even be completed.

Under normal market conditions, lenders would rarely accept such terms. Yet millions of Americans effectively do so every month if they receive electricity from investor-owned utilities.

For years this system remained largely unnoticed. But the rapid growth of renewable energy has brought its effects into sharper focus.

Between 2011 and 2020, wind and solar generation increased dramatically, and by 2024 both sources reached record levels of production. These technologies provide important benefits, but they also share a fundamental limitation: they do not produce electricity continuously.

Because of that, utilities must build additional infrastructure to maintain reliability. That means backup generation, expanded transmission lines, and energy storage systems.

All of that redundancy comes at a cost. Every new transmission line, backup turbine, and battery installation eventually shows up on a customer’s electricity bill.

And because of policies like CWIP, utilities can begin charging for those projects long before they are finished.

Many of the rules shaping today’s system were created with good intentions. Beginning in the 1970s, environmental organizations and public-interest law groups gained significant influence over how large infrastructure projects are approved. Their aim was to protect communities and the environment.

Over time, however, the process became increasingly difficult and slow. Stopping projects often became easier than building them. Delays became common, and lawsuits became a routine part of development.

Each delay adds costs. Rising costs then justify charging customers earlier in the process. And each increase makes the next one easier to accept.

Even commentators who support environmental goals have begun acknowledging the problem. Some argue that well-intended regulations have made it too difficult to build the infrastructure needed to support modern energy demand.

Regardless of the motivations behind these policies, the results matter most. When rules unintentionally drive up costs and slow progress, they eventually affect every household and business that relies on electricity.

There are proposals aimed at addressing these problems.

One example is legislation introduced by Representative Troy Balderson called the Affordable, Reliable, Clean Energy Security Act. The bill seeks clearer definitions for terms like “affordable,” “reliable,” and “clean” in energy policy. It also aims to ensure that investment risks are tied to cost-effective infrastructure projects rather than being broadly shifted to consumers.

The legislation would also recognize the role of dispatchable energy sources — such as natural gas and nuclear power — which can produce electricity whenever it is needed. Supporters argue that maintaining those resources is critical to keeping the power grid reliable while still meeting the standards of the Clean Air Act.

Reforms like these would not immediately lower electricity prices. But they could begin addressing a central problem: a system where incentives often drift away from the interests of customers.

Electricity is not a luxury. It is essential for economic growth, public safety, and everyday life. Keeping it affordable requires policies that encourage efficient investment, distribute financial risk fairly, and maintain reliability.

Above all, it requires remembering a principle that once guided much of American infrastructure development:

People should pay for projects when they are finished and working — not before.

Until that principle becomes standard again, electricity bills may continue their quiet climb upward, leaving many Americans wondering why everyday life has become so much more expensive.

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