US Consumers Still Pay Less for Power Than Europe Despite Price-Hike Headlines

This article was written by Victoria Cuming, Head of Policy at BloombergNEF.

Headlines of surging power prices – and the related backlash from industry and the public – are pressuring policymakers to act. Some markets are still reeling from the impact of the 2021-2023 energy crisis. Others have seen retail power prices rise more recently, not least due to the Iran war.

Retail electricity rates can hit pocketbooks hard, which is why they are such a political trigger. Yet the impact of rising prices can be much broader, as they also risk undermining market competitiveness and delaying electrification, which can improve energy security.

Many consumers pay more for power today than before the Covid-19 pandemic

Average retail power prices for households and industry rose faster than inflation over 2019-2025 in around three-quarters of the 37 markets covered by a recent BloombergNEF report. Industry saw a bigger average increase, of 24% in real terms compared with 12% for households.

Since 2019, markets like the UK, Japan and Argentina have experienced significant retail price volatility. A key driver was the 2021-23 energy crisis sparked by Russia’s invasion of Ukraine, which especially affected markets reliant on natural gas imports. Tariff types, currency volatility, a given region’s precise mix of power-generating technologies and inflation also had an impact.

Other markets have experienced less volatility. These have been insulated by domestic energy resources including renewables, as well as regulatory systems and interventions to stabilize prices. In Canada, Brazil and New Zealand, for example, 2025 retail tariffs were relatively similar to 2019 levels after adjusting for inflation.

However, prices were markedly higher in deregulated US markets like California and New Jersey, as well as South Korea and Spain. Rising network and subsidy costs, and the end of price-stabilization measures, have contributed to the increase.

China, India, Mexico and Russia bucked the trend, with decreasing residential tariffs in real terms – and some of the lowest retail rates in the BloombergNEF report. These markets have higher levels of regulatory intervention, including subsidies, together with domestic energy resources.

Residential power prices have risen slightly in the US but surged in Australia

Electricity rates are fast climbing the US political agenda, especially as the November midterm elections approach. That said, many states have seen only a modest increase in inflation-adjusted household prices, and 20 underwent a decrease. As a result, the US saw a 3% rise in average real residential prices over 2019-2025 across the 50 states and Washington DC. On average, US households pay less than other major economies, at $173 per megawatt-hour in 2025 compared with $435/MWh in Germany, $391/MWh in the UK and $333/MWh in Australia.

Europe’s higher prices are partly due to higher policy costs and taxes, as these countries have historically used consumer bills to fund green, social and other public support. In contrast, policymakers in the US and other regions often finance such schemes via the general government budget, or have not put such support in place. However, European electricity prices also include higher network costs and, in some cases, wholesale and supply costs, compared with other markets.

Australia had the biggest rise in household prices out of all markets in the BNEF report, at 186% in real terms over 2019-2025. Tariffs were initially driven up by high fossil fuel prices and supply constraints, but more recent drivers have been generator outages and periods of high demand, as well as rising network costs. As a result, it has some of the highest retail rates in this report.

High power prices put European industry at a competitive disadvantage

Residential consumers pay higher electricity rates than industry in most of the markets studied in the BNEF report. The primary reason is that households face higher per-unit network and customer-service costs, while large industrial users consume more electricity and can therefore spread fixed costs over more megawatt-hours. Industry also benefits from stronger negotiating power and, in some cases, preferential tax or policy treatment.

Yet power prices can still make or break many industrial sectors, where they play an important role in market competitiveness. This especially true for sectors with a large existing share of electrified processes, such as aluminum, and those where electrification is a key decarbonization pathway, like steel.

Despite some European policymakers’ efforts to reduce or limit rates, companies in the region still pay higher prices than other industrial hubs. For example, the UK had an average of $327/MWh in 2025, while Germany’s average was $226/MWh, compared with $110MWh in the US and $89/MWh in China.