Dive Brief:

• Investor-owned utilities have boosted their 5-year capital expenditure plans by about 21% in order to meet rising electricity demand, threatening to exacerbate an energy affordability crisis that is worrying almost three-quarters of Americans, according to a report from PowerLines, an energy consumer nonprofit.
• The group reviewed 51 recent utility quarterly earnings calls and found IOUs plan to spend $1.4 trillion through 2030, up from the $1.1 trillion that was laid out in capex plans last year. The growing total “could become a major driver of future rate increase requests,” PowerLines warned.
• The Southeast “is a particular hot spot of proposed capital spending,” PowerLines Executive Director Charles Hua told journalists in a Tuesday discussion of the report. Utility capex plans in the South total $572 billion, more than double any other region, the report found.

Dive Insight:

Utility spending plans show “a significant increase over the pace of annual spending over the last decade,” Hua said. And while capex investment doesn’t have to result in higher electricity prices, “that correlation is pretty sharp.”

Along with the increased spending, gas and electric utilities last year requested $31 billion in rate increases, more than double the $15 billion requested by utilities in 2024. Those increases “have not yet fully hit people’s bills,” Hua said. Capex and rate increases are “both leading indicators for where the trends around utility and electricity affordability could go over the next coming years,” he said.

Electric utilities say the investments aim to rein in cost increases down the road.

“These investments are essential to keeping the system reliable and as affordable as possible over the long term,” Drew Maloney, president and CEO of the Edison Electric Institute, which represents IOUs, said in a statement to Utility Dive.

Electricity affordability has become a key issue, particularly as data centers drive electricity demand projections higher. From 2019 to 2025, the nominal price of a kilowatt-hour rose 33% for residential customers, according to recent analysis by Lawrence Berkeley National Laboratory and The Brattle Group. Customers are already stretched thin, and experts say more bill increases are likely. A recent PowerLines poll found 73% of Americans are concerned that their bills will rise again next year.

Utilities’ 2025 fourth quarter earnings reports illustrate a spending spree, with investment focused on transmission, gas-fired generation, grid hardening and wildfire mitigation. After decades of stagnant demand growth, the North American Electric Reliability Corp. now expects summer peak demand across the bulk system to grow by 224 GW over the next 10 years, a 24% increase from 2025 peak demand. New data centers account for most of the projected increase. 

“Investing proactively helps avoid higher costs tomorrow and ensures we can serve growing demand,” Maloney said. “Because these infrastructure investments are built to last for decades, we’re able to spread costs over time and finance them responsibly, which helps keep annual costs manageable for customers.”

The South makes up the largest portion of utility capex plans, with about $572 billion planned for the region, followed by the Midwest ($272 billion), the West ($225 billion) and the Northeast ($195 billion). Because some projects span regions, the totals do not match the national spend, according to the report.

“If you look at the top 10 utilities broken down by proposed capital spend, nine of the 10 have some footprint in the South,” Hua said.

Duke Energy serves customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky — and has a $103 billion five-year spending plan, the largest of any regulated U.S. utility.

Duke “serves some of the fastest growing parts of the country in terms of population and economic growth and we’re executing an energy modernization plan to serve our customers and communities,” utility spokesperson Mary Scott Winstead said in an email to Utility Dive. “We continue to transform the largest transmission and distribution system in the nation with targeted investments to improve the reliability and resiliency of our system while delivering value for our customers.”

But the Southeast broadly is seeing “extraordinary” upward pressure on rates, Stephen Smith, executive director of the Southern Alliance for Clean Energy, told Utility Dive. Post-COVID inflation accounts for some of the bill increases, he said, but most blame can be put on “the extraordinary digital demand” coming from crypto mining, data centers for cloud support, and AI hyperscalers. 

“It appears to us that the utilities are becoming almost untethered” in their buildouts and load projections, Smith said. “It’s like a gold rush for them,” proposing investment to meet load growth that at times is “pure speculation,” he said.

EEI’s Maloney said that as more customers come onto the electric system, including large new users, “we can share the fixed costs more broadly, putting downward pressure on rates for all customers.”

But so far, Smith said most states in the Southeast have done a poor job at insulating customers from extreme rate hikes.

“We do not see responsible corporate utility behavior showing proper levels of sensitivity to residential customers getting hammered,” he said.