How Higher Electric Bills Are Changing the Way Americans Spend

Rising energy costs are taking a toll on pocketbooks, forcing some Americans to either cut back on grocery purchases or reduce heating or air conditioning to try to save money. This is what a recent survey found about how Americans are coping with the increased energy costs, as well as who they are blaming.

Surging Energy Prices Impacting Spending in Other Areas

A new Consumer Reports survey demonstrates how Americans are trying to make up for the rising cost of electricity by cutting back in other ways. The survey found that approximately 20% of Americans said that they have cut back on groceries or considered purchasing less expensive food in order to afford soaring electric bills. Likewise, roughly 1 in 4 people surveyed said that they have either reduced their heating or air conditioning to uncomfortable levels or thought about doing so.

Nearly every American is feeling the pinch in some way. As the survey demonstrates, many households are being forced to cut back on other types of nonessential spending to afford electricity costs. This includes a sharp reduction in eating out and traveling.

The survey of over 2,000 adults found that 81% of respondents who have lived in the same home for three years or more reported that their electricity bills have gone up during this period. Over a quarter of the respondents reported electric bill increases of 20% to 49% during this time.

Not surprisingly, roughly 75% of the respondents who reported increases in electric costs also said that the higher prices have put a strain on their household finances. Families with annual household incomes below the $85,000 mark were more than twice as likely as those with higher incomes to note that the increased energy costs were putting significant strain on their budgets.

Rising electricity costs are just one of several affordability concerns facing Americans in today's tough economy. Notably, higher gasoline and diesel prices attributed to the ongoing conflicts with Iran have really taken a toll.

Why Electric Bills Continue to Climb

In addition to the conflict in the Middle East, survey respondents are blaming utility companies for putting profit margins over everything else as a reason for the dramatic increase in electricity costs. About 45% of the respondents blamed these companies for the surge in pricing.

Other factors identified by the respondents for driving the prices up include the increased demand for energy from data centers and artificial intelligence (AI) systems, volatile fossil fuel prices, and the increased cost to update crumbling energy infrastructure.

Approximately 75% of the respondents also noted that they trust state utility regulators either only a little or none at all when it comes to protecting consumer interests. Only 1% of those surveyed said that they trust the regulators completely.

Sara Enright, senior director of safety and energy at Consumer Reports, explained that “Americans are being asked to foot the bill for costs they didn't create and can't control." She went on to note that "This survey shows people see through that. They want the costs and risks to stay with the corporate entities that create them, not residential customers.”

Consumer Reports is now trying to help American households get a better grasp on their energy costs so that they can push for more affordable rates with a new initiative known as Power Smarter. The program comes with a free CR Bill Decoder, giving customers the ability to submit their household electricity bills to search for financial assistance programs in their state. The tool also helps customers find potential ways to reduce their costs while helping them to better understand their specific billing terms and fees.

The consumer advocacy group launched the tool in an effort to make Americans feel more empowered as they try to understand their bills. The survey found that 38% of the respondents said that it was somewhat or very difficult to understand the bills.

The discontent toward AI data centers is also growing. A whopping 84% of the respondents reported that they support creating a separate utility rate category for these centers. Additionally, about half of those surveyed support data centers paying for all of the infrastructure costs needed to pay for the operation of these facilities.

Preparing for Winter Heating Bills

With colder weather on the way, heating costs are likely to push many electric bills even higher in the coming months. A few simple steps can help keep costs down. Lowering the thermostat by 7 to 10 degrees for about eight hours a day, such as while you’re asleep or away from home, can save up to 10% a year on heating and cooling, according to the U.S. Department of Energy.

Sealing drafts around windows and doors can also help keep warm air inside. Many utilities offer budget billing plans that spread costs evenly across the year, which can make winter bills easier to manage.

For households that need extra help, the federal Low Income Home Energy Assistance Program (LIHEAP) provides support with heating costs, and local utilities can often point customers toward additional assistance programs in their area.

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