The Challenge of Energy Affordability and Security

February 05, 2026

Presentation Slides:�cclusa.org/energy-affordability-slides

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About Our Speakers

With Support from

Research Manager

Citizens’ Climate Lobby

Georgia Public Service Commissioner

Learning Goals

1. Learn about why energy affordability and security are so important

2. Understand what’s causing electricity prices to rise, and what to expect in the future

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3. Investigate potential solutions to help address these problems

Why this is so important

Electrifying Everything

• A core piece of reaching net zero emissions is to decarbonize power generation, electrify everything
• High electricity prices deter people from electrifying appliances, vehicles, etc.
• Insufficient power supply makes it very difficult to electrify everything

Rapid rise in residential electricity rates in recent years. �How does it compare to inflation?

Not Faster than Inflation Everywhere

What’s causing rates to rise?

Gas Power Production

Winter storm Uri, TX

Renewable Power Production

Distribution & Transmission

Distribution and Transmission

• Much of the current transmission and distribution infrastructure was built in the 1960s and 1970s, is nearing its end of life
• Extreme weather events like wildfires and hurricanes damage this infrastructure
• Growing power demand & supply accelerates the need for upgrades
• Transmission can reduce other costs; distribution doesn’t

Climate & Extreme Weather

Climate Change & Extreme Weather

Wildfire Plan Costs are Coming

Load Growth, Data Centers

Data Centers & Load Growth

• Adding utility customers can reduce rates if there’s sufficient existing unused supply
• As a result, data center load growth has usually reduced rates … so far
• Load growth is so fast that it’s already anticipated to contribute to rising electricity rates in 2026 forecasts
• But data center load growth is easy to overestimate!

Potential Overbuilding Cost Risk

State Renewables Policies

Renewable Portfolio Standards and Net Metering

• RPSs require utilities to get a specified percentage of power from renewables by a specified date
• Renewables have not increased electricity rates, but RPSs have, a bit
• Net metering pays homeowners with rooftop solar for power they send back
• They’re paying less for grid infrastructure, but also reducing the need to build new power plants and infrastructure

Investor-Owned Utility Profits

Utility Profits are Arguably too High

• Key term: “return on equity” (ROE)
• “Utilities get paid to spend more money” -Jigar Shah
• State regulators set utility ROE (~10%)
• For $10 billion in infrastructure investments, 10% ROE yields $1 billion in profit
• Accounts for 15–20% of our utility bills

Utility Profits are Arguably too High

Utility returns on equity (9.6%) are 30% higher than Wall Street asset managers’ stock market return forecasts, but should be lower due to lower risks

Potential Solutions

Build Faster → Permitting Reform

• Deploy more cheap clean energy
• Build more electrical transmission to share cheap clean electricity
• Meet growing demand with affordable generation and avoid blackouts

Change Utility Incentive Structures

• Performance-based instead of cost-of-service regulation
• Reward utilities for factors like grid reliability, customer service, decarbonization
• Lower the Return on Equity
• California barely lowered it
• New Jersey considering this

Shift Costs Out of Rates

Some costs needn’t be included in price per kWh of electricity usage. Other options:

• Pay them in state budgets
• Include them in base fees

Make Data Centers Pay

• Bring
• Your
• Own
• New
• Clean
• Electricity

Distributed Solar & Efficiency

• Easiest way to reduce electricity bills: buy less electricity
• Efficiency is the cheapest solution
• Balcony solar is small, but having a policy moment
• Heat pumps are super efficient and can reduce bills, but lost IRA financial support

Incentivize Virtual Power Plants

• Coordinate customer resources like solar & batteries, EVs, smart appliances
• This reduces need to expand distribution infrastructure
• Customers who participate can directly benefit financially

Other Legislative Ideas

• Government subsidies
• Restore IRA credits
• Add transmission credit
• Expand low-income programs
• Consider natural gas price effects before approving LNG export terminal permits
• Expand community solar
• Reduce rooftop solar ‘soft costs’

• Expedite interconnection processes
• Incentivize grid enhancing techs
• Interregional transmission
• Permitting reform
• Limit energy emergency powers
• Tie utility earnings to customer benefits in shared savings program

More on Permitting Reform

Upcoming Permitting Reform Trainings

Transmission Reform

Thursday, March 5th

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Build Faster

Thursday, March 19th

�Fair Permitting Certainty

Thursday, April 2nd

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Community Engagement

Thursday, May 7th

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All trainings at 8 pm ET / 5 pm PT �Recordings will be posted on CCL Community afterwards.

Guest Speaker

Georgia Public Service Commissioner

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www.citizensclimatelobby.org

California Case Study

Maine Case Study

North Dakota and PJM Case Studies

Utility Profits are Arguably too High

Ratio of stock market prices to their book values >1 suggests utility return on equity (set by state regulators) is higher than necessary.

Not rising, but profit incentive to invest in more infrastructure (capex, not opex).