Energy Innovation models show federal policy shifts will raise U.S. household energy costs by $6,500 by 2040

Energy Innovation, a nonpartisan think tank based in California, released a study in October showing that households in the contiguous United States will pay an average of $6,500 more for energy through 2040. The modeling isolates the financial impact of federal policy changes enacted since President Donald Trump returned to office. These changes include the cancellation of new wind, solar, and hydrogen projects and the revocation of policies that incentivized efficient, lower-emission vehicles.

The analysis projects that five states will see the steepest increases. Households in Oregon, Mississippi, South Dakota, Virginia, and Wyoming are expected to pay roughly $9,000 more in cumulative costs through 2040. Oregon faces the highest projected increase, with annual energy spending expected to rise by $1,200 per household by 2040. This represents a cumulative increase of $9,300 from 2026 to 2040, the highest figure among all states in the study.

The think tank attributes the cost rise to increased demand for natural gas and gasoline. Federal actions are shifting electricity generation toward natural gas and transportation toward gasoline, driving prices higher. The study also projects job losses in 47 of the 48 contiguous states and gross domestic product losses in 46 states. Additionally, the analysis estimates that environmental rollbacks will result in 37,000 additional premature deaths from air pollution and $72 billion in extra healthcare costs. More than 9 billion tons of additional carbon pollution is also projected.

Robbie Orvis, senior director for modeling and analysis at Energy Innovation, stated that the outlook for state affordability has worsened due to the combined set of policies. The analysis excluded Alaska and Hawaii because key federal data for those states is unavailable. The White House has contested the study, with a spokesperson describing the think tank as partisan because its employees have donated to and worked with Democrats on climate policy. Energy Innovation spokesman Silvio Marcacci countered that the group works with policymakers across party lines and that much of its data comes from government sources like the Energy Information Administration.

Mar Zepeda, legislative director for the Climate Justice Alliance, said her electric bill in Washington, D.C., increased by $200 in September. She blamed data center demand and federal affordability policies. Bob Jenks, executive director of the Oregon Citizens’ Utility Board, called the projected Oregon costs frightening. He noted that utilities already face steep rate increases from infrastructure upgrades and data center usage. Jenks expects more disconnections for customers who cannot afford their bills as costs continue to climb.

The Energy Information Administration expects residential U.S. customers to pay 18.6 cents per kilowatt-hour in 2027. This is up from 17.3 cents in 2025 and 18.2 cents in 2026. The International Energy Agency noted that energy prices have outpaced income growth and inflation in the United States and the European Union since 2019. Record prices were observed between 2022 and 2024 in the European Union, the United Kingdom, Japan, and Korea following Russia's invasion of Ukraine.