New study finds rising electricity bills driven primarily by infrastructure spending and state policy decisions—not power generation costs.
FOR IMMEDIATE RELEASE: May 14, 2025
CONTACT: Christina Nyquist | 603.930.8818 | cnyquist@epsa.org
WASHINGTON, D.C. – Today, the Electric Power Supply Association (EPSA) and Energy Tariff Experts (ETE) released a study debunking the ongoing narrative that rising electricity bills are the result of high generation costs. The study analyzed 10 years of costs disclosed by utilities serving customers in Pennsylvania, Ohio, New Jersey, and Maryland, all of which are part of the PJM Interconnection territory, to understand the role of generation costs in monthly energy bills.
ETE’s study found that the generation component of residential customer bills accounted for only about 45% of the costs of the average electric bill across the utilities studied. Distribution, transmission, and state policies and taxes made up the remaining portion of electric bills. While electric generation has been impacted by inflation and rising costs in the same way as many other industries, the data shows that generation still makes up roughly the same percentage of bills as it did 10 years ago. Even as policy choices and utility investments in transmission and distribution have continued to drive overall bill costs upward, the costs of generation and capacity have remained generally stable.
PJM has historically delivered significant benefits and cost savings to its 65 million customers. Recently, however, it has faced significant scrutiny over high prices in its most recent capacity auction, leading to organized efforts by state leaders to undermine competitive markets.
However, as the study shows, the rising costs that consumers are actually seeing on their bills are not driven by capacity or generation. Higher bills are largely a reflection of growing spending by local utilities on transmission and distribution systems and the costs of state policies that have pushed generation sources into early retirement and increased cost of operation for remaining thermal plants.
The report’s key highlights include:
- Generation accounts for roughly the same percentage of an electric bill today as it did 10 years ago – 45% on average.
- Generation costs today remain lower than in some recent years across the PJM region.
- Capacity auction prices make up only a small portion of electric bills across PJM. The total costs of generation and capacity have seen increases from recent record lows, but total combined generation and capacity costs remain consistent with prices seen during the 2010s, especially on an inflation-adjusted basis.
“Competitive markets continue to prove they are the ideal mechanism to not only keeping electric power prices manageable, but in meeting rising demand and encouraging system efficiency while shielding ratepayers from investment risk,” said Todd Snitchler, President and CEO of the Electric Power Supply Association. “It’s clear that the rise in capacity costs is a consequence of application of state policies that have led to the premature retirement of critical baseload power and tightening supply at a time when it is needed most. Rising capacity prices are not a cause for panic, rather a clear market signal that new generation is needed. PJM’s recent Reliability Resource Initiative (RRI) shows that generators are ready and eager to address supply challenges if common sense policies are in place,” he continued.
“The data is clear: electric generation prices within competitive wholesale markets, though impacted by the same range of challenges as almost every industry, have trended lower in recent years and even with the reset of capacity prices in June 2025 remain lower than many years from the 2010s on an inflation adjusted basis throughout PJM” said James Bride, President of Energy Tariff Experts. “Competitive wholesale markets, like PJM, are delivering significant benefits including improved efficiency, lower emissions, and costs savings to its 65 million customers.”
“The growing chorus of elected officials raising the alarm about rising consumer costs who cast blame on PJM for the result of its recent capacity market auction continue to miss the mark in what can only be viewed as an effort to avoid accountability for the policy choices they have advocated for which are now showing up in consumers’ bills”, Snitchler concluded.
Actions by state leaders to intervene in competitive market structures are misguided. Power generation costs remain in line with inflationary costs over the past decade according to data, and markets are functioning as designed. State lawmakers must correct policies within their borders that address premature power plant retirements, create hurdles for the buildout of infrastructure, and penalize baseload, dispatchable energy through increased prices and fees.
Read more here.
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The Electric Power Supply Association (EPSA) is the national trade association representing America’s competitive power suppliers. EPSA members provide about 175,000 MW of reliable and competitively priced electricity from environmentally responsible facilities using a diverse mix of fuels and technologies including natural gas, wind, solar, hydropower, geothermal, storage, biomass, and coal. EPSA seeks to bring the benefits of competition to all power customers. Learn more at www.epsa.org and connect with us on LinkedIn and X @EPSAnews.
