There was a time — not ancient history, not some pre-industrial fantasy — when an American family could budget for their utility bill with the same confidence they had about the rent. You knew roughly what it would be. It didn't spike in February. It didn't triple when the weather turned cold. It was just there, modest and dependable, like the mailbox.
That predictability wasn't an accident. It was the result of a specific set of policy decisions that treated electricity and gas as public necessities — not commodities to be traded, not opportunities for profit optimization, but basic services that every household deserved access to at a fair and stable price.
Then those decisions got reversed. And most Americans didn't notice until the bill arrived.
The Era of the Regulated Utility
For most of the twentieth century, American electricity and natural gas were delivered by regulated monopolies — local or regional utilities that operated under strict government oversight. The arrangement was a deliberate trade-off: the utility got exclusive rights to serve a geographic area, and in exchange, a state public utility commission controlled what it could charge.
Rates were set through a formal process. The utility would present its costs, regulators would review them, and a price would be approved that allowed for a reasonable profit without gouging customers. The whole thing was slow, bureaucratic, and occasionally frustrating — but it produced something genuinely valuable: stability.
In 1950, the average American household paid roughly 3 cents per kilowatt-hour for electricity. By 1970, that had actually fallen to around 2.1 cents — a real-terms decline driven by improvements in generation efficiency and the economies of scale that came with postwar infrastructure investment. Even by 1980, the national average was still only about 5 cents per kilowatt-hour in nominal terms, which translates to roughly 18 cents in today's dollars.
The current national average? About 16 cents per kilowatt-hour in nominal terms — but that figure masks enormous regional variation, and it doesn't capture what's happened to the total monthly bill as home square footage, appliance count, and electronic device usage have all grown.
More importantly, it doesn't capture the volatility.
Deregulation and the Promise That Didn't Quite Deliver
The push to deregulate energy markets gained serious momentum in the 1990s. The theory was straightforward and appealing: open electricity generation to competition, let the market set prices, and consumers would benefit from lower rates as providers competed for their business. It was the same logic that had worked reasonably well in airline deregulation and telecommunications.
Between 1996 and 2002, about half of U.S. states passed some form of electricity deregulation. California went first and most aggressively — and almost immediately became a cautionary tale. The 2000-2001 California energy crisis produced rolling blackouts, price spikes of 800 percent or more on wholesale markets, and a financial catastrophe for consumers and the state government alike. Enron's manipulation of those deregulated markets became one of the most notorious corporate scandals in American history.
Other states watched California and pumped the brakes. Some that had started deregulating reversed course entirely. But in states that stayed the course — Texas, Illinois, Pennsylvania, and others — the effects have been mixed at best and damaging at worst for lower-income households.
Texas offers perhaps the starkest example. The state runs its own largely isolated electricity grid, ERCOT, under a deregulated model that allows retail providers to offer variable-rate plans. In February 2021, Winter Storm Uri pushed demand beyond the grid's capacity. Wholesale electricity prices hit the state-imposed cap of $9,000 per megawatt-hour — roughly 300 times the normal rate. Some customers on variable-rate plans received bills of $5,000, $10,000, even $17,000 for a single month. People froze in their homes. Hundreds died. The predictable utility bill had, in the most literal sense, become a matter of life and death.
The Numbers That Tell the Story
Look at what the average American household actually spends on energy today versus fifty years ago, and the picture becomes uncomfortable.
In 1973, the average U.S. household spent about 4.5 percent of its budget on home energy — electricity and gas combined. By 2023, that figure had climbed to roughly 8 to 9 percent for middle-income households — and significantly higher for lower-income ones, where energy costs can consume 20 percent or more of take-home pay. The Department of Energy defines households spending more than 6 percent of income on energy as "energy burdened." By that definition, tens of millions of American families qualify.
The nonprofit American Council for an Energy-Efficient Economy estimates that approximately 25 million U.S. households have had to choose between paying their energy bill and meeting other basic needs — food, medicine, rent — at some point in recent years. That phrase, "heat or eat," was once a description of poverty in developing nations. It is now a documented reality for a meaningful slice of the American middle class.
What Accountability Used to Look Like
The regulated utility model had real flaws. It could be slow to innovate. It occasionally protected inefficient operators from the consequences of their own poor management. It didn't always reward conservation or investment in cleaner energy sources.
But it had one feature that's easy to undervalue until it's gone: a human face.
If your utility raised rates, there was a public hearing. Your state representative could get involved. Local newspapers covered rate cases. The utility commission was a real institution with real accountability to the communities it served. If rates climbed too fast or service deteriorated, there were mechanisms — imperfect ones, but real ones — for pushing back.
In a deregulated market, when your variable-rate energy provider spikes your bill because of a cold snap in the Midwest, there's no hearing to attend. There's a customer service line with a forty-minute hold time and a script that explains the market conditions. That's the accountability mechanism now.
The Stability We Stopped Expecting
Predictability in a household budget sounds like a small thing until you don't have it. When the rent is fixed, the car payment is fixed, the insurance premium is fixed, but the utility bill swings by $150 from month to month, it throws off everything. Families over-save in summer anticipating winter spikes. They delay other expenses. They carry low-grade financial anxiety about a bill they can't control and can't fully predict.
The families who managed household budgets in 1965 didn't think about their electric bill very much. It was just there — modest, reliable, and completely undramatic.
That's not what the energy bill is today. It's a variable, a wildcard, a source of stress for millions of households that are already stretched thin. We traded the boring predictability of a regulated utility for the theoretical benefits of a competitive market — and for a very large number of American families, that turned out to be a bad deal.
