Consumers are beginning to feel renewed pressure on their monthly utility bills, according to new data from the Bank of America Institute. The average payment for electricity and gas rose 3.6% year-over-year in the third quarter of 2025, based on the bank’s internal deposit data. While that represents a slowdown from the nearly 10% annual growth seen earlier this year, analysts warn the relief may be short-lived.
The report points to multiple factors behind the uptick, including rising consumer prices for electricity and gas, which climbed 6% and 14% year-over-year in August, according to Bureau of Labor Statistics data. The difference between consumer prices and actual payment growth suggests that temporary factors, like a relatively mild summer, may have delayed the full impact of rising costs.
Regional Variations and AI’s Role in Higher Bills
Utility costs are rising unevenly across the country. Households in cities like Chicago and Tampa saw double-digit increases in average utility payments over the summer, while Las Vegas experienced declines of more than 10%.
Beyond weather and local regulations, analysts highlight a new structural driver: the surge in electricity demand from AI data centers. Bank of America Global Research estimates that U.S. electrical demand will grow at a 2.5% compound annual rate through 2035, fueled by the expansion of AI, manufacturing, and electric vehicles.
This growth is already feeding into higher residential rates as utilities invest in expanding grid capacity. For instance, capacity auction prices in the PJM Interconnection region, which covers 13 states, have jumped from $34 per megawatt-day in 2023/24 to $329 per megawatt-day for 2026/27, a nearly tenfold increase before a price cap was introduced.
What’s Ahead for Consumers
The report warns that utility costs are likely to rise further as supply struggles to keep pace with surging demand. Building new generation and transmission capacity remains slow and expensive, and ongoing supply chain constraints are adding delays.
For lower-income households, the impact could be especially tough. While these families typically have smaller utility bills (about 80% of the national average), they spend a larger share of their income on electricity and gas — around 4.5% compared with 3% for the average household.
At a time when wage growth is slowing, higher energy costs could strain budgets and limit discretionary spending, a key concern for lenders and financial institutions monitoring consumer stability.
