Energy panel hears the reasons for the rising price of power

Did your utility bills for electricity and natural gas go up in 2025? If so, you’re not alone.

The U.S. Bureau of Labor Statistics broke down the eight most common monthly expenses for an average American household and found that, percentage-wise, nothing saw a greater increase in price last year than piped gas, which went up by 10.8%. The second largest jump was the 6.7% boost in prices for electricity.

That fact was part of Pete Wyckoff’s Thursday presentation to the House Energy Finance and Policy Committee on the state’s energy landscape, which focused upon recent increases, but warned that worse ones may be on the way due to recent federal action.

“Nationally, last year, energy drove inflation,” said Wyckoff, deputy commissioner of energy resources at the Commerce Department. In Minnesota, electricity supplier Otter Tail Power has asked to raise rates by 17.7%, he said, while Xcel Energy would like to increase its rate for gas by 8.2%.

So what’s driving the increases? Utilities tend to cite the costs of replacing aging infrastructure, dealing with extreme weather events and volatile fuel costs. But Wyckoff said fuel costs are actually down, while transmission and distribution costs are rising.

According to Wyckoff, since 2020, U.S. demand for electricity is growing again after 15 years of relatively flat growth rates.

“We may be entering a different era in 2025, 2026,” he said. “We are starting to see load growth again, and that changes how we think about the electric system. What’s driving that? It’s new uses for electricity like heat pumps and electric vehicles. And then the big, sexy thing everyone is talking about: mega users of electricity like data centers.”

Wyckoff said data centers are driving near-term U.S. power demand, but it’s believed that electric vehicles will be the chief driver in ensuing years.

Federal energy policy changes

The deputy commissioner said that recent changes at the federal level could increase Minnesotans’ energy bills by 10% by 2029 and between 25% and 42% by 2035. Among those changes are:

• repeal of clean energy tax credits;
• failure to deliver on contracts for energy-related grants;
• tariffs, particularly on clean energy components;
• policies to stop coal plant closures; and
• policies to increase exports of natural gas.

Wyckoff also lamented the termination of a clean hydrogen production credit that he believes could have transformed the iron industry in Minnesota.

“These are the kind of things that are out of our control,” said the committee’s co-chair, Rep. Chris Swedzinski (R-Ghent). “There are things within this room that we can change, whether it be mandates that we’re putting on purchasing, net metering reform, solar garden reform.”

But the committee’s other co-chair, Rep. Patty Acomb (DFL-Minnetonka), nevertheless expressed disappointment at the federal changes.

“[Minnesotans] pay a lot more into the federal government than we get out,” she said. “And when we’re getting less out than was even promised, that’s concerning.”