When consumers don’t like the price of gas, groceries, or a haircut, they can shop around for a cheaper option. Not so for electricity.  

Richard Hirsh at Virginia Tech said utilities have pretty much always been monopolies. 

“In 1882, Thomas Edison built the first electric power plant that provided a large number of customers electricity in New York City,” he said.  

In the early days of electricity, companies built power plants in cities with large customer bases. 

“The economies of scale in the utility industry enabled companies to produce cheaper and cheaper electricity and charge lower and lower rates in a way that would not occur in a competitive system,” Hirsh said. 

According to a report by the consumer advocacy group Powerlines, 2025 is a record year for energy costs. In the first six months of the year, the total amount of rate increases requested or implemented by utility companies tops $29 billion.

Additionally, electricity rates across the country have risen approximately 13% in the past three years, according to the U.S. Energy Information Administration. 

That’s due to a variety of factors, including rising demand for electricity coupled with aging infrastructure that’s expensive to maintain and replace. Then, there’s the expansion of power-hungry data centers. Many utilities are investing in new power plants, the cost of which ultimately gets passed on to customers.  

To prevent price gouging, electrical utilities are regulated in each state. When companies want to raise prices or recoup investment costs, they present their case before regulators.  

Since utilities provide something that we all need, regulators want them to be viable, without exploiting their customers as monopolies. 

“Natural” monopolies occur in industries that require large upfront investments. Severin Borenstein at the University of Califonia, Berkeley, said there are also mechanical reasons it's easier for just one company to make or deliver electricity: powerlines.  

“If somebody is already running wires down your street, it's both economically inefficient and just a bad business idea to say we're going to spend a lot of money to do exactly what they're doing already,” he said.

The high cost of upgrading and repairing that aging infrastructure — which is especially vulnerable to increasingly severe weather — is one of many factors causing high utility bills this year.

Whereas in other industries, competition can lead to lower prices for customers, that hasn't yet been the case with utilities.  

Due to the infrastructure required, Borenstein said a retail market for electricity isn’t likely anytime soon.  

“Basically, we need wires that go to everybody's house or company and as long as that's the case we're going to have monopoly utilities,” he said. 

That used to also be the case for phone lines, but cell technology meant more consumer choice for providers. Technology hasn’t advanced for that to succeed with electricity just yet.