The residents of Lake Havasu City, near Arizona’s western border, knew their electricity bills would go up.
Their utility — UniSource — had gotten approval from state regulators for its first rate increase in seven years to take effect in 2024. The projected $14 monthly bump was designed to cover the much-needed cost of upgrading infrastructure and building a cleaner grid to deliver more power to more people in increasingly hot summers.
But when residents started seeing triple-digit increases on their summertime bills, Mayor Cal Sheehy thought there must be a problem. A movie theater’s $12,500 bill for just one month of power made the front page of the local newspaper.
“We have some of our citizens who are making choices between paying utility bills and buying groceries and medications,” said Sheehy, who has served in the nonpartisan office since 2018.
Those hefty bills — which UniSource has said reflects seasonality and how individuals use electricity, not improper rates — have captured the attention of state officials, including the attorney general. But they’re just one example of an issue that’s become a political flashpoint in Arizona. Across the state, residents complain of high electricity prices, and the state has seen dozens of reports of people who have died in their homes because they either turned off air conditioning or set it to a dangerously high temperature to avoid expensive bills.
It’s not likely to abate any time soon. The GOP megalaw signed by President Donald Trump last month is forecast to raise electricity prices by slashing development of new, low-cost wind and solar power and instead keeping aging coal and gas plants open.
The true effects won’t be known for years and will vary across the country, but an analysis by Princeton University estimates that annual energy costs could increase an average of $165 per household by 2030 and $280 by 2035. Separate estimates by Energy Innovation forecast a 25 percent increase in wholesale electricity prices by 2030 compared to current policies, resulting in household electricity rates that are between 9 and 18 percent higher by 2035.
“The last four years have seen significant inflation in all areas, but especially energy prices,” said Dan O’Brien, a senior modeling analyst at Energy Innovation. “In a world without this bill, we’d see more new technology come onto the grid and make it more efficient to reel back in some of that inflation. But instead, we’ve got a bill where you strangle and restrict the technologies of the future.”
“One way to look at this bill is that it’s inflationary in that it increases the cost of producing power for utilities and the utilities pass that on to you and me and the industries that want to invest,” he added.
In Arizona, cutting clean energy taxes could result in a 12.7 percent increase in electricity bills to households and 4.7 percent to businesses between 2026 and 2032, according to a report from NERA Economic Consulting released by the Clean Energy Buyers Association. That report, which was done before the final OBBBA language was released, found that the result would be a $340 annual loss in household income for Arizonans.
The state represents much of what ails the nation’s electric grid. A surge of data centers and manufacturing plants is driving up industrial demand. Homeowners are cranking up air conditioning to deal with increasingly hot summers where temperatures regularly sit in the triple digits. And the region’s aging coal plants — like the Navajo Generating Station and the massive Cholla Power Plant — are closing as they become too costly to retrofit, requiring new generation to be built.
Already the state’s largest electric utilities set peak demand records this summer. Arizona Public Service, the largest utility, says it could see peak demand jump 60 percent by 2038.
“The question is who pays for all that growth and whether it’s possible to build that much generation in such a short period of time,” said Amanda Ormond, a former director of the Arizona Energy Office and energy consultant. “And now this bill kneecaps the clean energy industry. And what’s stunning to me is what an ideologically blind move this is.”
Political potency
As Democrats and environmental groups try to exploit the politics of the tax and spending law, electricity prices have emerged as a potent line of attack. Ad campaigns from groups like Clean Energy for America, Protect Our Jobs and Climate Power have all highlighted the issue. A new ad from the League of Conservation Voters and House Majority Forward, a progressive PAC, is running in the Arizona district of Republican Rep. Juan Ciscomani, accusing him of “creating a massive rate hike on electricity.”
During his presidential campaign, Trump used rising energy prices to make his case against the Biden administration and even vowed to halve bills within his first year. But prices have continued to rise. The U.S. Energy Information Administration said this spring that retail electricity prices are set to rise faster than inflation through 2026, following a 13 percent increase between 2022 and 2025. That projection came before the megalaw vote.
So far in 2025, utilities nationally have requested roughly $29 billion in total rate increases, already more than was requested in all of 2024, according to a report from nonprofit PowerLines.
The reasons behind rate increases differ from region to region. Some may be for infrastructure repair, others for wildfire protection and others to handle spikes in fuel prices. Arizona utilities have attributed much of their costs to massive load growth.
Between 2012 and 2023, the average price of electricity in the state has risen 24 percent, according to data from the EIA and, as of 2023, is higher than in 31 other states.
Customers of two of the state’s largest electric utilities are set to see steeper hikes even without the influence of the OBBBA. Arizona Public Service is asking state regulators to approve a 14 percent rate increase — about $20 per customer — to pay for rising demand. Tucson Electric Power is also seeking a 14 percent increase, which it says would add about $16 per month.
The state’s utility regulatory board has also approved a so-called formula rate calculation for regulated utilities that could allow them to request annual rate increases rather than waiting every few years for a new rate case.
APS spokesperson Michael Philipsen said in an email that it was too early to say how the OBBA would affect future rates. No planned projects, he said, have yet been canceled and that the company will continue to “select the lowest cost, best-fit resources to meet the growing energy needs of our customers.” At this time, he said, there was no indication of whether customer prices would be affected by the tax law changes.
Joe Barrios, a spokesperson for UniSource, said similarly that there was no indication yet of how the bill would affect future rates. The company, he said, has no immediate plans to increase rates.
Barrios also said that residents of Lake Havasu City have used less energy this summer, resulting in lower bills. The average bill in the city in June was $251.78, down from $277.66 the year prior.
Ormond said that affordability and reliability can only come through building more renewables, since they are essentially free to run and can come online faster than a new gas plant. Studies have shown that wind and solar paired with battery storage is increasingly cost competitive with a new gas plant.
“When you put a wind solar and battery plant together on the grid, you know exactly what the price is going to be for the life of that project,” Ormond said. “If you put a power plant with a fuel source on the system, that’s not stable and that can show up in people’s rates.”
The White House has placed the blame for electricity prices on Democrats’ pro-renewables policies and said that the president’s policies promoting oil and gas production would help bring down costs.
“Since Day One, President Trump has taken decisive steps to unleash American energy, which has driven oil production and reduced the cost of energy,” said spokesperson Taylor Rogers. “The One, Big, Beautiful Bill will turbocharge energy production by streamlining operations for maximum efficiency and expanding domestic production capacity, which will deliver further relief to American families and businesses.”
According to the Arizona Commerce Authority, a public-private business development group, IRA tax credits contributed to 134 project leads in the state for a total of $58 billion in existing and potential clean energy investments. The state is in the midst of a renewable energy boom, with Arizona installing the sixth most new solar last year, according to the Solar Energy Industries Association. In 2024, renewable energy provided about 20 percent of the state’s electricity.
Whether the megalaw will affect that development remains to be seen. But Kelly McGowan, who leads a state nonprofit that distributes federal utility assistance funds, said that the potential drop in clean energy comes at a fraught time, with utility bills rising and looming cuts to the social safety net.
“Low-income families already hadn’t recovered from the pandemic and now all the major utilities are coming back for a rate increase,” said McGowan.
Making ends meet
Shirley Ross and her husband moved to Pearce, Arizona — an unincorporated community in the southeastern part of the state — in 2010 to find a lower cost of living than their longtime California lifestyle. They had enough to buy the house “in the middle of nowhere,” Ross said, but with just one Social Security check coming in a month, even that was a struggle.
So when she saw a flyer attached to her utility bill for the Southeastern Arizona Community Action Program (SEACAP) advertising ways to spend less on electricity and heating, she jumped at the chance. Not only did SEACAP offer direct assistance on her utility bills, cutting them in half, but it also connected Ross with incentives to improve the house’s efficiency.
Gone was the avocado-green refrigerator that dated to the ’70s. Contractors put insulation in the attic and closed up leaky windows. The heater and air conditioner were upgraded, a necessity in an area where the lows can be in the teens and the highs can top 110 degrees.
Ross’ monthly utilities have risen from about $100 when they first moved to around $200, in part because her husband is now running an oxygen machine full time. Without the upgrades, Ross says she knows she’d be paying much more.
“We would have made it work. I’m too stubborn not to do it,” Ross said. “But I know we wouldn’t be eating as well as we do.”
But now federal programs that helped people make similar improvements are also on the chopping block after passage of the OBBBA. Tax credits designed to cover up to 30 percent of upgrades for energy efficiency improvements and credits to help offset the cost of clean energy systems, battery storage or heat pumps are set to expire at the end of 2025.
McGowan’s group, Wildfire, is also keeping a close eye on the status of LIHEAP, the federal assistance program for low-income households. The program has been hit by staffing cuts at the Department of Health and Human Services, and Trump’s fiscal 2026 budget proposal would eliminate its funding entirely.
That means Wildfire and similar groups are in wait-and-see mode, hoping they can continue their work in what McGowan says is becoming a life and death situation.
“We’re putting families in a position where they’re choosing between paying for electricity, food or housing with no backstop,” she said. “We know that families struggling to pay their utility bills will result in more evictions, more hospitalizations and more heat-related deaths.”
