One Hundred and Sixty Percent More on Wires, and Rates Still Climbing
American utilities spent 160 percent more on distribution infrastructure in 2023 than they did in 2003. Transmission spending nearly tripled over the same period. Retail electricity rates rose over 5 percent in the past year, outpacing inflation by a wide margin. And a new analysis from the Clean Air Task Force concludes that the culprit is not what most political narratives suggest.
The infrastructure math. CATF’s data, drawing on two decades of utility spending records, isolates where costs are actually accumulating. The answer is physical hardware: poles, wires, transformers, substations, and the labor to install and maintain them. Distribution and transmission together represent the fastest-growing components of the average electricity bill. These are infrastructure costs, not generation costs. No generation technology, renewable or otherwise, is responsible for the trend.
The states that disprove the narrative. Iowa, New Mexico, and South Dakota deployed renewables at higher rates than nearly any other states in the country. They also experienced the largest electricity rate decreases. The CATF analysis finds no causal relationship between renewable energy deployment and rate increases at the state level. The correlation, where it exists, runs in the opposite direction: more renewables, lower rates.
States with high natural gas dependence, by contrast, experienced the most rate volatility, tracking the commodity’s dramatic price swings from the 2022 spike through the 2024 decline and into the current period of disruption as the Iran conflict pushes oil above $80 per barrel and Strait of Hormuz traffic remains intermittent.
The capacity price shock. PJM’s capacity market illustrates the compounding pressure. Capacity auction prices increased by “nearly an order of magnitude,” according to CATF, driven by two forces: surging load growth and interconnection queue congestion. Data from this week’s Electric Power Supply Association summit in Washington puts a finer point on it. Of PJM’s 5,250 MW in new auction demand, 5,100 MW came from large customers, overwhelmingly data centers. That is 97 percent of new load from a single customer class.
The grid is being asked to build out massively to serve concentrated, high-density loads. The infrastructure to reach those loads is what costs money. The electrons themselves, particularly from solar and wind with zero fuel cost, are historically cheap.
The Western Energy Imbalance Market. CAISO’s latest WEIM data adds a complicating layer. In 2025, battery storage capacity and coal generation both increased across western states while total market load stayed flat. An additional 19,350 MW of battery capacity is planned through 2028 outside CAISO. Coal did not decline. Batteries did not displace it. Both grew.
Grid transitions do not follow clean substitution curves. Battery storage is scaling rapidly in the West, but it is currently adding to the generation mix rather than replacing thermal plants on a one-for-one basis. In the broader western market, coal plants with existing transmission interconnections and sunk capital costs continue running alongside new battery installations that have not yet reached the scale or duration to substitute for baseload thermal generation. Whether and when batteries begin displacing coal in WEIM states will depend on duration economics, state policy, and retirement schedules that remain uncertain.
Where the money goes. The CATF analysis identifies commercially available, cost-effective solutions that could reduce rate pressure without new legislation. Accelerating interconnection processing is one. The current queue backlog keeps the cheapest new generation from reaching the grid. Every year a solar-plus-storage project sits in an interconnection queue is a year that ratepayers pay more for power from existing, more expensive sources.
Reducing gas price exposure is another. The states with the lowest rate increases tend to have diversified generation portfolios that limit exposure to any single fuel commodity. Battery storage, with zero fuel cost and declining capital costs, structurally hedges against the kind of gas price volatility that drove rate spikes across New England and the mid-Atlantic in 2022.
The political overlay. This week’s Ratepayer Protection Pledge, signed at the White House by Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI, commits hyperscalers to covering their own power costs rather than passing them to ratepayers. The pledge contains no binding enforcement mechanisms, no independent auditing, and no defined methodology for measuring compliance. Latitude Media characterized the open question as whether it constitutes policy or political theater. President Trump acknowledged the hyperscalers “need some PR help.”
What the pledge does accomplish, intentionally or not, is frame electricity cost as a political liability. That framing matters because it shapes which solutions get deployed. If policymakers restrict clean energy based on the assumption it raises rates, the CATF data suggests they would be targeting the wrong cost driver. Distribution and transmission spending, not generation mix, accounts for the steepest cost growth on the average electricity bill.
The BTM logic. Generation deployed behind the meter, at or near the point of consumption, avoids transmission and distribution infrastructure costs by design. It does not require interconnection queue processing. It does not add to the wires spending that CATF identifies as the fastest-growing cost component. And when paired with battery storage, it reduces exposure to both demand charges and fuel-price volatility.
The CATF report does not prescribe battery storage as a solution. Its findings, however, quantify the cost problem that behind-the-meter storage is engineered to avoid. At 160 percent distribution cost growth over two decades, the economic case for generating and storing power on-site is less about energy policy preference and more about which line items on the electricity bill are growing fastest.
Sources
A Data-Driven Look at Rising U.S. Electricity Costs and Policy Solutions (Clean Air Task Force)
Clean energy deployment alone doesn’t raise rates: CATF (Utility Dive)
EPSA Summit Focuses on Meeting Rising Demand (RTO Insider)
Battery Capacity, Coal Use Rise in WEIM in 2025 (RTO Insider)
Open Circuit: The White House AI Power Pledge, Political Theater or Policy? (Latitude Media)
Fact Sheet: President Donald J. Trump Advances Energy Affordability with the Ratepayer Protection Pledge (White House)
Trump: Data Centers, Big Tech Hyperscalers ‘Need Some PR Help’ on Affordability (Fortune)