The 'price gouging' myth that can wreck the grid — and your bills

Capping utility profits sounds like a win for consumers — but it could mean a weaker grid, more blackouts, and higher bills down the road.

The cost of electricity has become a hot-button issue in the 2026 election, and politicians have pointed their fingers at any number of culprits to avoid responsibility. Some progressive activists contend that grid investments by utility companies are primarily motivated by a desire to increase profits rather than to serve customers. However, that narrative ignores the reality that improving our grid is essential to strengthening reliability and supporting economic growth.

The heavily regulated utility industry is not in any position to gouge its customers, and there's no evidence that utility profits have increased in the last few years. The reality is that setting electricity rates is a very complex process that involves weighing customer protection and future investment, and any rate increases are done only with the approval of public utility commissions.

At the center of the debate are private utility companies' returns on equity, or how much profit they are allowed to earn from providing services. A sufficient ROE helps attract capital to invest in the grid (that is, the poles, wires, and substations) to increase reliability and access. If providing electricity generates no ROE, then private investors — who provide the capital needed to run utility companies — would withdraw their money, leaving us with a deteriorating grid.

By Ike Brannon, published July 16, 2026.