Many Americans struggle to keep the lights turned on as energy costs and usage rise

With the cost of things like food and housing still straining people's budgets, many U.S. households over the past year have found themselves having to pare their spending on basic necessities just to keep the lights on at home.

That's according to a recent Lending Tree study which analyzed U.S. Census Bureau Household Pulse Survey data from Aug. 20, 2024 to Sep. 16, 2024 to find the percentage of Americans 18 and older that had cut back on necessary expenses to pay their energy bill, kept their home at an unsafe or unhealthy temperature, or was unable to pay the full amount on an energy bill at least once over the preceding 12 months. 

The study found that more than 34% of respondents said they have had to cut back or skip spending on certain necessary expenses at least once over the past year in order to pay their energy bill. 

"Even though inflation has moderated in recent months, life is still crazy-expensive, and that can make it hard to pay your bills," Matt Schulz, LendingTree chief credit analyst, said in the report. "Lots of people have found themselves needing to make difficult decisions to keep the lights on. For some, that might mean cutting back on some expenses. For others, it might mean getting a side hustle or a second job."

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Not surprisingly, households in poorer states are having a harder time keeping up with their electricity bill. In Alabama and Mississippi, more than 44% of residents reported having to make sacrifices to pay their utility bill, according to LendingTree. Eight of the top 11 states with the highest percentage of people struggling to pay energy bills are in the South, according to the report. 

"Southern states tend to be low-income states, which means that each month can be a struggle," Schulz said. "Add in that these are also low credit score states, and the predicament gets tougher." 

Adding to people's struggle is the rising cost of utilities. On average, in August Americans spent an average of $185.59 on electricity bills, according to LendingTree, a 2.6% increase from $180.82 in the same month a year ago. That said, residents in states with the highest energy rates don't necessarily pay the highest average monthly bills, according to the report, which found notable disparities in energy usage.

For instance, Arizona, which has an average electricity rate of 42.10 cents per kilowatt-hour, or 14.7% below the national average of 16.63 cents, still has the second highest average monthly bill at $254.47, according to the report. Connecticut, which only has the third-highest electricity rate at 29.93 cents, or 109.7% above the national average, has the highest average monthly bill in the country, $254.47.

Schulz expects both power costs and usage to continue increasing.

"For one, climate change and the extreme weather that can come along with it may lead to greater usage, both in the heat of summer and the cold of winter," he said. "Also, many utility companies are seeking to raise their rates in response to growing demand and other issues, and they're getting their way in many cases. It all adds up to some challenges for people with tight budgets."