Electricity costs have exploded in recent years because of the massive data center buildout, more extreme weather, and foreign wars increasing already-volatile fossil fuel prices. As residential electricity rates have risen, more and more people have fallen into utility debt. One in six households are behind on their power bills. Meanwhile, utilities are working hand-in-glove with data center developers and tech companies, creating huge bill increases for everyday people. 

The Electric Debt Cancellation Program would provide $20 billion in forgivable loans to investor-owned, public, and cooperative utilities conditioned on eliminating all existing residential ratepayer debt, reconnecting residential users, and submitting a concrete affordability plan that tackles the root causes of increased electricity prices, including the climate crisis and data center proliferation. This would have massive implications for millions of people’s pocketbooks and build momentum around the idea that the federal government can and should intervene more explicitly in managing utilities to make the electricity sector work for people by keeping rates affordable, making electricity green, and ensuring reliability in more extreme weather.

We are in an energy affordability crisis. Electricity prices have risen 10.5 percent in the past year.¹ In 2025 alone, utility companies requested $31 billion in rate-hikes, with a total of $93 billion forecasted between 2025 and 2028.² Because most power utilities charge a flat volumetric rate, regardless of household income, this system is also highly regressive: low-income households pay 9.1 percent of their income on energy, over three times the rate for other households.³

According to recent research by the Century Foundation and Protect Borrowers, one in six households is behind on their energy bills, with arrears averaging $789—up 32 percent from 2022.⁴ As families fall further behind on their bills and try to survive ever-increasing extreme weather, utilities will shut off their access to electricity or sell the utility debt to third party debt collectors.

Data centers: Electric utilities are building new transmission and generation to service behemoth data center operations, relying on increasing rates to cover their investment costs. In Virginia, one of the world’s epicenters of data center development, wholesale electricity costs are up 267 percent from where they were five years ago.⁵ Utility companies get a profit cut from these investments and the tech industry is hell-bent on accelerating AI deployment to create technological lock-in and ultimately rake in profits themselves. In the end, ratepayers, who could barely afford their bills before the boom, are subsidizing AI acceleration.

Climate instability: More extreme weather conditions are wreaking havoc on the electricity sector. In the western United States, wildfire damages cost billions every year, and massive storms keep hitting the eastern part of the country.⁶ A backlog of delayed upgrades in the grid have also made it far more susceptible to break down under weather pressures. The ever-increasing amount of high heat days during the summer are forcing people to use more electricity to stay cool, not only increasing their bills with more demand but creating electricity shortages for the grid overall.⁷ The increased demand requires utilities to rely on expensive (and dirty) peaker plants. As staying cool and safe is harder than ever, people cannot afford to keep air conditioners running.

Oil and gas: Trump’s illegal war with Iran is catapulting electricity prices ever higher. Crude oil prices are up over 75 percent from December 2025.⁸ The war exposes how volatile the oil and gas sector is, especially since it is such an international commodity. On a longer-term, systemic level, fossil fuels are the reason for the climate crisis, and their continued use will only increase extreme weather severity and, therefore, electricity prices. 

We at CCI propose a $20 billion Electric Debt Cancellation Program, run out of the Treasury Department, that could provide forgivable loans to investor-, cooperative-, and publicly owned electric utilities conditioned on three critical commitments:

There is clear popular demand for programs like this. Recent polling shows that people feel their utility bills are going up and 64 percent of people blame their utility’s focus on profits as the reason.⁹

The National Energy Assistance Directors Association estimates that arrears for electric and gas utilities combined was $23 billion in May 2025.¹⁰ Resourcing the program at $20 billion would give utilities the funds to plan and launch their residential rate affordability plans. Alleviating arrears is helpful to utilities because it reduces their need to spend money on collections and eases the impact on their cashflow and fiscal space for investment.¹¹

Most importantly, this program would provide immediate relief to residential ratepayers across the country who are overwhelmed by the potential of experiencing utility shutoffs or debt collectors at their door. Existing programs like the Low Income Home Energy Assistance Program (LIHEAP) are important for supporting residents struggling with their utility bills and investing in energy efficiency and should continue to be funded. But the Electric Debt Cancellation Program will not require a bottom-up approach with individual households applying. Instead, it will have the benefit of eliminating debt for all residents under utilities who take up the forgivable loan. 

The Electric Debt Cancellation Program is a reconcilable program that conditions forgivable loans to utilities upon specific actions. During the American Rescue Plan, Congress passed a similar $800 billion program under the Small Business Administration called the Paycheck Protection Program to incentivize keeping staff on the books during the COVID-19 pandemic.¹² In exchange for continuing to employ their workers, the businesses who received funds could use them to cover payroll, benefits, mortgage costs, and more. The loan was forgivable if the business held up their end of the deal—if not, the loan was not forgiven. Similarly, the Electric Debt Cancellation Program would condition funds upon specific actions to eliminate residential arrears and come up with a concrete affordability plan. The federal government should require inserts on utility bills when debt is eliminated, describing the federal government’s role in the elimination.

Debt is a crushing experience. Every day becomes more precarious and eliminates working people’s ability to buy a car, rent a house, or even just buy groceries. Eliminating electric utility debt will unburden millions of families and allow them to have more control over their personal finances when electric utility bills have become an increasingly big part of a family’s monthly costs. 

Electric utilities have built a powerful alliance with the tech industry to prioritize the buildout of data centers and put money in the pockets of both industries to the detriment of residential ratepayers. This debt cancellation strategy is a first step toward showing that the government can intervene and show up for people in times of need when these industries have not. It also puts utilities on notice that utility affordability has to be taken seriously and the federal government is ready and willing to intervene on behalf of consumers.

Electricity debt cancellation is an important power-building step toward more transformative electricity and decarbonization policies. The scale and scope of the affordability and debt crisis for electric utilities shows just how mis-incentivized the utility system is. Instead of providing what should be considered a universal basic service to people that keeps them safe, utilities are entering into dirty deals with tech giants for data centers and continuing to build out fossil fuel infrastructure. 

In our report, “Overcharged,” we outline strategies to fundamentally reorganize the electrical utility sector to provide affordable, green electricity for all.¹³ The first instrumental step is to stop the bleeding—starting with eliminating utility debt and implementing shutoff protections to care for the immediate crises people are experiencing as this proposal stands to do.

Debt cancellation can create political momentum to rewrite the rules of how utilities can operate. Utility debt is endemic to a largely antiquated, misaligned system. By implementing the Electric Debt Cancellation Program, the federal government can provide relief to families immediately, while opening up fiscal space for utilities by buying the debt from residential arrears. By conditioning the loan cancellation on a plan presented by the utilities that take on the root causes of unaffordability, the federal government also assumes enforcement power over the utility’s affordability measures into the future.

A plan for affordability by a single utility is a step, but it is not transformative enough. The federal government will also have to design additional policies that reorganize the sector toward green, affordable electricity for all. The data center charge by utilities shows that the industry is willing to bring new infrastructure online and upgrade to a greener, stronger power grid. However, utilities have largely refused to take on the green infrastructure transformation because, unlike data center development, it requires them to shutter their existing fossil fuel plants and deploy green technologies with hard-to-capture profits.¹⁴ 

Fundamentally, aligning the electricity sector with the critical goals of a rapid, affordable, and green transition will require a massive public project to put utilities under stronger public control and ownership, rein in unmitigated data center explosion, and marshal a huge amount of public green investment into solar, wind, storage, and grid infrastructure.¹⁵