Electricity prices are soaring, and coal is a key solution

Electricity bills are climbing almost everywhere, and the reasons have little to do with ideology. Three forces are driving prices higher: massive new utility spending on infrastructure, rising natural gas costs, and growing capacity shortages in electricity markets as power demand soars from the AI revolution.

In some states, prices have jumped more than 60% since 2022.

The Trump administration inherited this mess and now has its work cut out for it. The strategy the administration has embraced is built around reinforcing dispatchable power — the generating resources that run when called upon, not when the weather allows.

Along with trying to ramp up development of new nuclear and natural gas power plants, the administration’s biggest pivot from the Biden era is to freeze the closure of existing coal plants. It’s a 180-degree turn from the previous administration’s regulatory onslaught, and it couldn’t have come soon enough.

Preserving the coal fleet isn’t nostalgia — it’s pragmatism. Doing so is the critical foundation for any effort to address eroding grid reliability and to start lowering electricity prices.

Start with infrastructure spending. New transmission and distribution lines to build a grid that better accommodates renewable energy has single-handedly been the largest driver of growing utility spending and rising power prices.

While this spending has surged, consumers are rightfully wondering where the benefit is. Reliability challenges are mounting while monthly costs keep climbing. Preserving existing generating capacity, including the coal fleet, is a critical first step in throttling down runaway infrastructure capital spending.

Then there’s natural gas. While still historically low, natural gas prices are rising again. Prices have jumped from roughly $2 per million BTU to more than $3 this year and are projected to eclipse $4 next year. U.S. natural gas export capacity is also growing rapidly — creating new competition for U.S. gas from European and Asian buyers. Every $1 rise in U.S. natural gas prices pencils out to about $54 billion in added costs for U.S. consumers.

Here again, preserving the coal fleet is an important answer.

As natural gas prices rise, coal plants become a more economical option, ramping up generation and reducing gas demand. That optionality, especially when power demand peaks, is essential to shielding consumers from price spikes. With natural gas prices already up, U.S. coal consumption has risen 15% this year, helping reduce gas demand and ratepayer bills.

Finally, there’s the emerging capacity crunch. The Biden administration used a regulatory onslaught to try and force coal plants off the grid at the very moment power demand surged from electric vehicle adoption, new manufacturing, and, most notably, the AI and data center boom.

America’s electricity needs are forecast to increase nearly 80% by 2050. Electricity markets are woefully short of power and are sending signals — in the form of rising prices — to get new plants built and keep existing plants running.

To meet this enormous rise in demand, it’s imperative to halt coal plant closures, and use the remaining coal fleet as a foundation to build upon.

Renewable advocates and climate hawks have hammered the Trump administration for embracing the coal fleet. But the president is taking a realistic, consumer-first approach to address an emerging power supply shortage.

The electricity supply crunch is an enormous challenge, and it can’t be solved by gutting the existing backbone of our power grid. This administration’s energy strategy — to put reliability and affordability first — is a welcome return to energy sanity.

Matthew Kandrach is the president of Consumer Action for a Strong Economy.