Utility costs are rising sharply across North America, with climate change as a significant driver. Fossil fuel volatility, extreme weather and aging infrastructure are pushing electricity prices higher, burdening consumers and exacerbating economic inequality.

Analyzing the situation in North America reveals the severity of these issues and highlights the urgent need for climate action to address the root causes of this financial strain.

Fossil fuels and climate-driven costs

In the U.S., electricity prices have surged by 20 per cent over the past three years, reflecting a broader trend driven by fossil fuel volatility and climate-related disasters. The increased frequency of hurricanes, wildfires and floods is causing billions of dollars in damages to power infrastructure, which results in higher maintenance costs passed on to consumers.

The financial toll of these climate disasters could reach $24 billion annually by 2090, with service outages adding another $1.5 to $3.4 trillion in potential costs by mid-century. These figures highlight the growing economic burden of climate change on the energy sector.

Transitioning to renewable energy sources, which are less vulnerable to such disruptions, could help stabilize energy prices and protect consumers from these escalating costs. By investing in renewables, the U.S. can not only reduce emissions but also insulate households from the financial impacts of climate-driven crises, ensuring a more resilient energy system for the future.

Texas: High costs and market volatility

More specifically, Texas presents a vivid example of how climate impacts are driving up energy costs, worsened by the state’s unique challenges. The 2021 winter storm, which led to widespread power outages and caused billions in damages, serves as a stark reminder of how vulnerable the state’s energy infrastructure is to extreme weather.

These costs, passed directly to consumers, have contributed to a significant increase in energy bills. Additionally, Texas’s deregulated energy market, intended to foster competition, has instead led to significant price volatility, particularly during periods of peak demand like summer heatwaves.

Texans now face not only higher energy bills but also uncertainty regarding the amount they will have to pay each month. This volatility is especially challenging for low-income households, who are least able to absorb sudden increases in their utility costs.

The need for a more resilient energy system is evident; one that can withstand extreme weather events without imposing excessive financial burdens on consumers.

Nova Scotia: The rise of energy poverty

In Nova Scotia, rising utility costs are pushing more residents into energy poverty, a situation where households spend a significant portion of their income on energy.

The 6.5 per cent electricity rate hike implemented in 2024 has left many low-income households struggling to keep up with their bills, exacerbating the already high cost of living.

Community organizations across the province have reported a dramatic increase in the number of people seeking help with power arrears. For example, Adsum for Women and Children in Halifax spent $25,849 on power arrears in the first half of 2024 alone, surpassing the total spent in all of 2023. Chebucto Connections in Spryfield has seen its average monthly assistance nearly double from $464 to $830 this year.

Without the intervention of non-profit organizations, many more households would be facing disconnection. Despite claims from Nova Scotia Power that disconnections are not increasing, the growing need for assistance reflects the severe impact of rising utility costs on vulnerable populations. The situation highlights the urgent need for comprehensive solutions to address energy poverty and protect low-income households from the economic fallout of rising energy prices.

The economic case for climate action

The rising costs of utilities across North America signal the importance of addressing climate change through proactive policies and investments in renewable energy.

As fossil fuel prices become increasingly volatile and climate-related disasters more frequent, the financial burden on consumers will continue to grow. Investing in renewable energy offers a viable solution, providing a more stable and predictable energy supply.

For instance, Clean Energy Canada estimates that transitioning to renewables could save an average Alberta family $600 annually.

On a global scale, failing to address climate change could result in a $38-trillion annual burden by 2050, a cost that will ultimately be passed on to consumers through higher prices for everything from food to utilities.

By embracing climate action now, governments and businesses can protect both the environment and the economy, ensuring long-term affordability for households and reducing the financial risks associated with climate change.

Conclusion: Addressing the climate-driven cost burden

The rise in utility costs across North America is a clear consequence of the growing impact of climate change.

In the U.S., fossil fuel dependency and climate-related disasters are pushing electricity prices higher. Texas faces additional challenges with market volatility and aging infrastructure, leading to unpredictable and often unaffordable bills.

Meanwhile, in Nova Scotia, low-income households are increasingly being pushed into energy poverty due to rising rates and the broader cost of living crisis.

However, there is a path forward. By investing in renewable energy and addressing the root causes of climate change, we can create a more stable, sustainable and affordable future for all.

The economic case for climate action is clear: investing in renewables and other sustainable practices is not only a moral imperative but also a sound financial strategy that can mitigate the growing costs associated with climate change, and protect the most vulnerable from the devastating impacts of climate-driven economic instability.