Over the past ten years, average residential electricity bills have risen by 23% across the United States, even outpacing inflation in nine states. As a result, promoting affordable electricity is a top priority for states across the nation as many households struggle to pay their electricity bills.

These bill increases directly affect families: over 1 in 3 US households reported reducing or forgoing food or basic necessities to pay their energy bills last year while 1 in 5 households were simply unable to pay an energy bill in at least one month. Low-income households are disproportionately burdened by rising electricity bills: the average energy burden (the proportion of household income spent on electricity and fuel) among extremely low-income households in the United States is 14%. The average for non-low-income households is 3% and a household is considered energy impoverished at 10 percent.

The good news: since 2023, governors in at least 14 states have acted to address electricity affordability for residents. These actions are worth celebrating and can serve as inspiration for governors across the country. Governors are uniquely positioned to act now to improve electricity affordability as they play a variety of roles at the intersection of utility regulators, state legislatures, and other state agencies. While governors can’t directly alter utility regulation, modify programs, or pass legislation, they can provide clear directives or support for regulators, state agencies, and legislatures to enact or modify policies to improve electricity affordability and advance their state’s electricity policy for the future. They can also influence affordability policy by signing or vetoing the legislation that comes before them.

With this in mind, we researched recent governor-led actions and interviewed staff in three states to identify patterns and key takeaways for governors seeking to act on electricity affordability. Specifically, we considered actions within the past two years that were ultimately directed by governors. Governor-led actions identified in our research include championing legislation, issuing executive orders/directives, releasing state energy plans, and more.

Over the past three years, investments in costly transmission and distribution infrastructure to replace aging assets, modernize the grid, and improve resilience in the face of extreme weather events have driven 6.9% annual growth in average US residential electricity prices. This pressure to enhance grid infrastructure is likely to increase as the United States faces a projected nearly 16% increase in electricity demand over the next five years due to data centers, manufacturing, and electrification load growth.

At the same time, heavy reliance on natural gas has left the United States vulnerable to volatile natural gas prices driven in part by extreme weather events and the war in Ukraine. Since 2021, the variance in monthly natural gas prices is over two times larger than it was between 2008 and 2020. In the majority of states, fuel costs are a pass through to customers, meaning that customers bear 100% of the risk when natural gas prices soar, and utilities don’t have an incentive to avoid price spikes for customers. Motivated by these (and other) cost pressures, over a dozen governors have taken recent actions to improve electricity affordability while their states prepare for a future with increasing electricity demand.

Governors seeking to act in the future can learn from their peers who are leading the way and consider a targeted suite of actions focused on system cost containment, managing the overall cost of providing electricity and safeguarding customers, ensuring households have the ability to pay for electricity. The table below shows how governors have pursued a variety of actions to improve electricity affordability within the past two years.

Notes on the table:

• We include a row to highlight actions primarily focused on broader energy affordability (outside of electricity), acknowledging that some governors have focused efforts beyond electricity.
• Recognizing many actions are cross-cutting and likely to improve overall energy affordability, we include cross-cutting actions targeted at individual customers as electricity affordability actions (e.g., household energy efficiency programs) and those targeted at the system level in the broader energy affordability category (e.g., more cost-effective, targeted gas system replacement).

Governors have pursued a variety of commendable approaches to promote electricity affordability, with many states taking action to lower energy burdens, enhance customer programs, and reform utility regulation. With some exceptions, governors in most states have taken actions both to provide immediate relief for customers and actions to reduce systemwide costs over the long term. Some notable examples:

• In Massachusetts, Governor Healey is strengthening customer energy efficiency, demand response, and distributed energy resources programs like the Home Energy Audit and Weatherization program and the ConnectedSolutions program, which lowers system costs through savings at peak times. These programs give participating customers more agency over their monthly bills, allowing households to earn participation incentives for helping to stabilize the grid in the case of the ConnectedSolutions program.
• Ohio Governor DeWine supported and ultimately signed legislation to end ratepayer subsidies for two unprofitable coal plants operated by Ohio Valley Electric Coalition, providing immediate relief for customers. The subsidies, which had cost Ohio ratepayers nearly $500 million since 2019, will be removed from customers’ bills within 90 days.
• Elsewhere, several governors pursued long-term regulatory solutions to mitigate the impact of volatile natural gas prices on customers’ bills and promote more cost-effective wildfire mitigation by utilities. Governor Polis of Colorado called for the PUC to examine innovative regulatory approaches to better align utility financial interests with those of customers, which led to the PUC establishing a natural gas fuel risk-sharing mechanism.

However, careful planning and execution of these actions is critical to ensure customers experience a meaningful improvement in electricity affordability. It’s important to note that some actions governors have taken might not improve electricity affordability for households and potentially even have adverse effects on affordability. For example:

• One-time bill credits can provide valuable relief for households but they do little to address underlying affordability challenges and could hinder long-term progress if they are paid for by cuts to other valuable customer programs. Paying for bill credits with excess funds or through cap and invest programs can help avoid unintended long-term consequences on affordability.
• Similarly, re-allocating funds between energy efficiency rebates and weatherization programs may not change the status quo of electricity affordability. Using program cost-effectiveness as a guidepost for funding allocations or searching for additional funding to enhance these programs could be a better approach.
• Delaying the retirement of coal plants may ensure ratepayers are not burdened with stranded asset costs; however, ratepayers may already be paying for uneconomic coal plants to continue operating in the first place. In these cases, securitization could be a better approach to reduce costs for ratepayers.

Governors can lower energy burdens and reduce the cost of providing electricity in their states through a variety of legislative, regulatory, and programmatic actions. Below we offer examples of two kinds of actions governors are taking or considering, with an eye toward actions that enable system affordability for all ratepayers and customer affordability for individual households. Together, these policies can deliver the greatest impact on electricity affordability:

• System cost containment — actions that reduce overall system costs and ensure these costs are distributed fairly among customers
• Safeguarding customers — actions that ensure vulnerable customers have access to programs and can afford their electricity bills

Governors can look to the near- and long-term actions presented below for inspiration as they consider how to balance the need to provide near-term relief for customers with actions that lower system costs in the long run. For simplicity, we consider near-term actions as those that can be implemented quickly and have immediate effects and long-term actions as those that can drive meaningful change in the long term but whose effects may take some time to be felt.

Every state faces a unique set of challenges and opportunities, and governor-led affordability solutions should be tailored to these factors. Market structures, variation in public utility commission (PUC) authority, and different cost drivers all influence which actions governors can take and how effective they will be. As governors continue to promote electricity affordability in their states, here are some steps that other states have taken to help identify the most impactful actions:

• Take stock of the status quo — Gather information to assess the current affordability landscape and set of policies. Some relevant data points include energy burden among various groups (and geographies); the portfolio of existing state- and utility-sponsored energy efficiency, demand response, and distributed energy resources programs; customer discount programs; and the trends in electricity rates and bills. For example, one state we interviewed undertook a robust research process to collect localized data on energy burden, power outages, and other factors to inform affordability action in the future.
• Understand cost drivers — Engage with the PUC and utilities to understand state-specific cost drivers. National cost pressures like transmission and distribution investment, load growth, natural gas price volatility, and extreme weather may be more or less relevant in different states. Each state we interviewed shared the importance of understanding their unique cost drivers to design the most impactful affordability solutions for their state.
• Stakeholder engagement — Collaborate with a diverse set of stakeholders including the PUC, state agencies, customer advocates, utilities, and other states to identify the most impactful actions. Governors can leverage the expertise of these groups to help develop policies and get buy in from different stakeholders. In particular, PUCs have varying levels of authority across states, so maintaining open communication with commissioners and providing clear direction is key to successful policy implementation.

Electricity affordability is increasingly becoming a key priority for governors as they balance keeping costs down for households while ensuring their state is investing for a future with significantly higher electricity demand. In the past two years alone, governors in at least 14 states have acted through executive orders, state energy plans, legislation, and regulatory engagement to promote electricity affordability. These are impressive accomplishments and provide other governors with a wealth of examples to learn from as they seek to improve electricity affordability in their states. Looking ahead, governors can leverage their unique role in state government to build on this momentum and consider a targeted set of policies that help provide immediate relief for customers and lower systemwide costs in the long run.