Why Are Your Electricity Bills Rising? Monopoly Utility Profits Are Under Fresh Scrutiny

At a time when power bills are climbing faster than paychecks, regulated utilities are quietly keeping a bigger slice of every dollar families send them each month.

Story Snapshot

Investor-owned utilities now keep about 14–15 cents of every customer dollar as profit, up from around 13 cents earlier in the decade.
Regulators and lawmakers in several states are targeting allowed “return on equity,” the profit rate built into monopoly utility bills.
Utilities warn that cutting profits could hurt credit ratings and raise borrowing costs, but independent analysts say smarter financing can protect both customers and reliability.
Both conservatives and liberals see a system where families struggle to pay essential bills while politically connected utilities earn tens of billions in guaranteed profits.

How Utility Profits Became a Flashpoint

Across the country, people opening their power bills are finding higher charges even when they try to use less energy, and a growing share of those bills is going straight to corporate profit. A major analysis of more than 100 electric utilities found that from 2021 to 2024, companies kept about 13 cents of every dollar customers paid, with that margin rising to an average of 14.6 percent in 2025. For a typical $200 monthly electric bill, that means roughly $30 went to profit alone, not to fuel, grid upgrades, or storm repairs. This shift is happening as many households already feel squeezed by inflation, housing costs, and medical bills, feeding the sense on both the right and the left that the system favors big players over ordinary families.

What “Return on Equity” Means for Your Bill

Electric utilities are not normal businesses that compete on price; they are government-approved monopolies whose profits are set by state commissions using “rate-of-return regulation.” Under that system, regulators let utilities recover their expenses plus a specific profit rate on shareholder-funded assets, called the “return on equity,” and this rate directly shapes how much customers pay. When commissions set allowed returns near 10 percent, as has been common in many states, every dollar of capital the utility spends can earn that profit for decades. Consumer advocates argue that when these profit rates sit well above what investors actually need to back a low-risk monopoly, families are forced to overpay for essential service so shareholders can enjoy richer returns.

States Move to Rein In Profit Margins

Rising anger over affordability has pushed utility profits into the political spotlight, leading some states to study or trim allowed returns on equity for electric and gas companies. In California, regulators recently faced a stark choice: utilities wanted shareholder returns above 11 percent, while consumer groups urged cutting them down toward 6 percent to save customers billions each year. The commission ultimately kept profit margins near 10 percent, only shaving them slightly, which left many ratepayers frustrated as bills are still set to rise by almost 10 percent for some customers. New Jersey’s Energy Affordability and Reliability Action Team has gone further on paper, urging regulators to launch an “affordability docket” to assess whether monopoly utility returns truly match their investment risk and to align utility earnings with lower average residential bills.

Utilities Warn of Credit Damage, But Tools Exist

Utility executives and some regulators argue that cutting allowed profits could backfire by hurting credit ratings and raising borrowing costs, which they say would eventually show up in customer rates. They point to recent cases in places like Connecticut, where companies such as Eversource saw downgrades after regulators took a harder line on returns and cost recovery, and they frame this as proof that aggressive profit cuts would threaten the money needed for grid upkeep and storm resilience. Yet independent financial experts note that there are ways to lower bills without wrecking utility finances, such as increasing the share of equity in a company’s capital mix while trimming the profit rate, a shift that can protect credit metrics while still delivering ratepayer savings. In Michigan and other states, judges and staff often recommend sizable profit reductions, but commissions rarely adopt them in full, underscoring how cautious regulators remain in the face of utility pressure and market warnings.

Evidence of “Excess” Profits and the Deepening Trust Gap

Critics say the numbers now show a pattern of profit-taking that goes beyond what is needed to keep the lights on, and they link this to a wider distrust of powerful institutions. The Energy and Policy Institute reports that investor-owned utilities earned roughly $186 billion in profit between 2021 and 2024, with total corporate margins over the 2021–2025 period estimated at about $244 billion. One economic study suggests that “excess” returns on equity may be costing U.S. households around $50 billion per year, or roughly $300 annually for the typical family, money they could otherwise spend on food, savings, or paying down debt. Consumer advocates also warn that current rules reward utilities for building more infrastructure than may be strictly needed, because profit rises with capital spending, which can encourage “gold-plating” projects rather than smarter, lower-cost ways to deliver reliable service. For many Americans, these findings fit into a larger story they already believe: a government-regulated system where monopolies, lawyers, and lobbyists work the inside game while ordinary ratepayers are left out of the room but stuck with the bill.

Why This Fight Matters Beyond Party Lines

The clash over utility profits cuts across traditional politics because it blends pocketbook pain with the feeling that elites are gaming the rules in a sector families cannot avoid. Conservatives who resent rising energy costs, heavy-handed climate mandates, and corporate “woke” branding see another example of regulators protecting big companies while households sacrifice. Liberals who worry about inequality, climate change, and corporate power see monopoly utilities making double-digit returns while lower-income customers risk disconnection or must choose between cooling their homes and buying groceries. Both sides share a core concern: the people who write and enforce the rules in Washington and in state capitals seem more responsive to utility lobbyists and Wall Street than to the families who pay the bills, which deepens suspicion of a “deep state” that talks about affordability but rarely delivers it. The growing campaigns to cap profits, tighten review of capital projects, and tie returns to real bill reductions are, at their best, attempts to push this corner of the system back toward the basic American idea that hard work should let a family afford life’s essentials without being quietly fleeced by a regulated monopoly.