Many factors could lead to a rise in residential energy rates, including rising costs associated with generating, transmitting and distributing electricity. Other factors include increased investment in transmission and distribution lines on the part of energy companies and new federal regulations requiring those companies to invest in renewable energy sources.
Across the United States, energy companies are reporting increased costs in generating electricity, which results in part from the rising prices of electricity-generating commodities such as natural gas. Many energy companies have been investing heavily in upgrading their transmission and distribution capabilities, and these costs are passed directly to the consumer in the form of energy rate increases.
Similarly, the costs associated with increased investments in solar, wind and other green energy sources are also passed to the consumer, as it is generally more expensive to generate electricity using these sources. At the same time, the rate increases are also caused by a decrease in the electricity-generating capabilities across the United States, which is due to the closure of many coal and nuclear power plants. In California, droughts are partly responsible for driving up energy rates, as they have limited the amount of electricity that can be generated through hydroelectric power plants.