Utilities Pocket $244 Billion Profit As Energy Affordability Crisis Hits Americans

Senior woman shocked by unexpectedly high utility bill while checking finances online at home, emotional reaction to digital banking and household budget concerns. E-banking home finances

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Americans can feel the affordability crisis spiraling out of control.

Electricity bills rose 13% last year, forcing families to pay $110 more in 2025 compared to 2024, with 14 million people – one in 14 households – facing utility debt so severe they will be sent or soon will be sent to collections.

Several apparent factors are fueling this crisis: volatile natural gas prices pushed by record LNG exports, expensive coal plants being forced to stay online, the data center boom, and the One Big Beautiful Bill Act repealing federal tax credits designed to protect consumers.

But new analysis reveals a hidden reason America’s electricity bills are skyrocketing – utilities are pocketing hundreds of billions in profits from consumers.

The Energy & Policy Institute estimates electric utilities raked in $244 billion in profit from household bills between 2021-2025 – roughly 13% of total consumer bills went to corporate profits over that time.

In an era of inflation, when prices are rising across our economy, Americans just can’t afford to foot the bill for outsized corporate profits. Fortunately, government officials have options available to protect their constituents – if they choose to act.

Keeping the lights on shouldn’t cost this much

Paying utility bills every month is a part of life – we all know the saying “keep the lights on.” But until now, Americans have never known how much of their electricity bill goes toward utility profits.

EPI analyzed 2021-2024 financial data from 110 investor-owned utilities across the country, including utilities that bill customers for electric and gas service. The analysis also included 2025 filings for the 79 IOUs which have reported annual results to the U.S. Securities and Exchange Commission so far this year.

“The biggest takeaway is that for most Americans, when they pay their electric bill every month, a big chunk of that bill – probably bigger than they think – is going to their utility’s corporate profits,” said David Pomerantz, Energy Policy Institute’s executive director. “That money adds up.”

The average utility profit share rose from 13% in 2021-2024 to 15% in 2025 – meaning roughly $30 of every $200 electric bill paid by a utility customer was pocketed as profit instead of paying for new transmission or power plants.

EPI also developed a calculator so customers can see how much of their monthly utility bill goes directly to profits – for instance my utility Xcel Energy takes 15.4% of my bill as profit, roughly on par with the national average.

However, nearly 40 utilities had far higher profit margins than the national average between 2021-2024.

• Mid-American Energy – 27.2%
• Florida Power & Light – 23.1%
• Nantucket Electric – 23.2%
• Empire District Electric – 22.5%
• Florida Public Utilities – 20.3%
• CalPeco – 20.3%
• Public Service Electric & Gas – 19.4%
• Duke Energy Carolinas – 19.1%
• Alabama Power – 18.7%
• AEP Texas – 18.63%

Several of these utilities also ranked highest in the 2025 data, including Florida Power & Light at 27.4%, Mid-American Energy at 27.6%, and AEP Texas at 22.2%

Utilities in the Southeast operating outside of organized wholesale electricity markets – many of the top ten from 2021-2024 – reported the highest average profit shares, retaining nearly 16 percent of revenue as profit.

That differs from utilities operating within organized electricity markets, which reported significantly lower margins. For example, utilities in PJM Interconnection averaged 11.8%, while utilities in the markets serving New York and New England reported similar or lower levels.

In the Southeast, utilities own generation, transmission, and distribution — all profit generated across their value chain flows to them. In organized electricity markets, regulated utilities own transmission and distribution while generation assets are often owned by independent power producers whose profits aren’t captured in EPI’s analysis.

Roughly 30% of total U.S. electricity is sold by non-profit utilities, usually operating as cooperatives or municipally owned. Those utilities do not collect profit and typically charge lower rates.

Excess utility return on equity costs Americans $50 billion per year

Utility profits don’t happen without government oversight. IOUs generally operate as monopolies without competition in exchange for submitting the rates they charge customers to state Public Utility Commissions for approval.

As part of that rate-setting process, the state PUC sets the utility’s return on equity, or amount of profit utilities earn on equity they provide to pay for capital investments – it averages about 10% nationally.

Return on equity is one of the biggest factors behind a utility’s corporate profits, with a compounding effect where a utility makes large capital expenditures and regulators allow it to earn a high return on equity, forcing customers to pay high percentages of their bill toward corporate profits. The American Economic Liberties Project estimates excess return on equity cost customers $50 billion per year, or roughly $300 per household.

EPI explains this through a mortgage analogy.

A 5% interest rate on a home mortgage sounds reasonable. But a homebuyer who finances a $300,000 mortgage at 5% over 30 years will make total payments of roughly $580,000: the $300,000 they borrowed, plus nearly $280,000 in interest. By the end of the 30-year term, the homebuyer has paid close to twice what they originally borrowed…on a $1 billion power plant financed with equal shares of debt and equity — using an example 10% ROE and 5% debt rate over 30 years — customers pay roughly $775 million in profits to shareholders alone, on top of the full $1 billion in capital recovery. Add in debt interest, and total customer payments for that single asset approach $2.2 billion.

Policy options to cap excess utility profit

Governors across the political spectrum agree energy bills are out of control.

In his state of the state address, Governor Josh Shapiro said “we need to have a hard conversation about the amount of profit utilities and their investors can make on the backs of hardworking Pennsylvanians.”

Indiana Governor Mike Braun echoed a similar sentiment last year, saying “we can’t take it anymore,” directing the state ratepayer advocate “to evaluate utilities’ profits along with other cost savings measures to ease the burden on ratepayers.”

So what can be done?

EPI’s analysis includes several steps government officials can take to rein in profits:

• States can enact new legislation or use existing regulatory authority to lower a utility’s ROE; ROEs are currently set case by case, giving PUCs great discretion. States that adopt more conservative benchmarks, better calibrated to current market conditions, can reduce the profit margin embedded in customer bills.
• PUCs can scrutinize capital structure assumptions, including the mix of debt and equity in a utility’s capital structure that affects its overall rate of return. PUCs that push back on utilities seeking to hold more equity, which earns a higher return, can reduce allowed profits.
• States can reform ratemaking away from traditional rate-of-return regulation, which guarantees utilities a profit regardless of efficiency or customer outcomes, toward performance-based ratemaking structures linking utility earnings to measurable results which can incentivize controlling costs and improving service rather than expanding the rate base.
• States can also strengthen consumer advocacy in rate proceedings – in 1,600 rate cases studied over nearly 30 years, states with independent consumer advocates in utility rate proceedings authorized ROE almost half a percentage point lower on average.

Many of the factors increasing electricity bills are beyond the direct control of state officials, but utility profits are one way they can protect their constituents.

“No single policy can stem the affordability crisis,” said Pomerantz. “For all the talk from policymakers about how to lower customers’ bills, right-sizing these inflated profits seem like a great place to start.”