Rising U.S. Energy Bills Power Strong Gains for the First Trust Utilities AlphaDEX Fund

Breaking: U.S. Utility Bills Keep Climbing as AI Power Demand Grows – Investors Eye New Opportunities

Energy costs across the United States have risen by about 13% since the start of 2025, a trend that hits household budgets while also creating potential upside for investors in the utilities sector. Essentials like heat and electricity remain in demand, giving power suppliers a steadier revenue foundation even as overall markets wobble.

For those seeking broad exposure to the sector, a particular exchange‑traded fund could stand out as a vehicle to ride these shifting dynamics. Utilities, traditionally defensive, are drawing renewed attention as electricity use climbs to meet growing AI infrastructure needs and stubbornly higher fossil fuel inputs.

Why America’s Utility Bills Are Rising

The utilities group has struggled in the near term,posting a small loss over the last month,the worst among major S&P 500 sectors.Yet the sector may regain momentum as 2026 unfolds, supported by several tailwinds. Higher electric bills are occurring amid slower renewable energy progress,higher input costs for fossil-fuel power generation,and a surge in electricity demand tied to AI data centers.

Policy shifts under the current administration have restrained renewable project permitting, contributing to delays or cancellations of nearly 25,000 megawatts of planned generation.In practical terms, that translates to less electricity supply than previously expected, enough to power tens of millions of homes where the capacity available. Simultaneously occurring, natural gas prices have risen sharply, and gas remains a major electricity source in the U.S.-accounting for well over four-tenths of generation.

As data centers supporting AI technologies expand, nationwide electricity usage climbs, a trend that has been widely reported and discussed in market analyses. the industry is already witnessing rising power consumption from AI infrastructure, with projections showing AI facilities could account for a meaningful share of demand by the end of the decade.

Current estimates place AI data centers at roughly 4.4% of U.S. electricity consumption, with forecasts calling for that share to rise to the 12%-20% window by 2030. Meanwhile, utilities have raised or sought to lift bills by more than $85 billion, affecting households across nearly every state.

Because independent powering for data centers remains a consideration, the broader expansion of electricity use is still a driver of potential gains for utility stocks and related investment products.

Diving Into FXU: A Growth-Oriented Utility ETF

Investors frequently enough gravitate toward large-cap utility names or broad sector ETFs. One fund, however, emphasizes growth potential by including a broader set of utilities and using a research‑driven index to select holdings. The fund tracks a methodology that weighs momentum and fundamental factors,aiming for upside while maintaining diversified exposure.

Key attributes highlighted by its issuer include a low allocation concentration, with no single holding dominating the portfolio. The fund also offers a modest expense ratio and a persistent dividend, appealing to long-term investors who want growth plus income. Its structure seeks to balance exposure across the sector while avoiding heavy bets on any one name.

What Wall Street Thinks About FXU

Liquidity for the fund is solid, though it trades less heavily than the broadest sector benchmarks. Institutional participation remains robust, with meaningful inflows over the past year and minimal short-interest staying in a narrow range.Analysts surveyed on the fund’s holdings broadly rate it as a Moderate Buy, reflecting cautious optimism about its diversified approach within a volatile macro backdrop.

Metric	FXU	XLU
Year-to-date performance	Up 17.65%	Up 11.35%
Average daily trading volume	256,355 shares	22.32 million shares
12-month institutional inflows	Over $610 million	–
Short interest	0.25%	–
Expense ratio	0.63%	–
Dividend per share	$1.03	–
Top holdings concentration	None above 5%	–

Takeaways for Investors

Breaking shifts in energy demand, policy dynamics, and data-center growth suggest utilities can offer both resilience and upside opportunities.Growth-oriented ETF approaches that responsibly diversify holdings may help mitigate concentration risk while capturing rising electricity use tied to AI infrastructure.

For households,the message is clear: as electricity demand grows,so does the importance of energy budgeting and rate visibility. For investors, the evolving landscape may favor well‑structured funds that blend growth potential with steady income streams.

Disclaimer: This article is for informational purposes and is not financial advice. Market conditions can change rapidly, and readers should consult thier own advisers before making investment decisions.

Have you already adjusted your portfolio to reflect higher utility costs and AI-driven demand? Which utilities or ETFs do you prefer, and why?

How do you think AI data centers will influence energy pricing over the next 12 months? Share your views in the comments below.

Sources include energy market analyses and fund disclosures. For broader context on energy economics, see reports from the U.S. Energy Data Administration and Climate Power.

Customers – Most investor‑owned utilities operate under cost‑plus rate structures, allowing them to recover fuel‑price spikes through tariff adjustments approved by state public utility commissions.

Rising U.S. Energy bills Power Strong Gains for teh First Trust Utilities AlphaDEX Fund

Why Higher Energy prices Are Boosting Utility‑Focused ETFs

* Higher wholesale commodity costs translate into higher retail rates – The U.S. Energy Facts Administration (EIA) reported a 12% year‑over‑year increase in average residential electricity prices in Q3 2025, the steepest rise as 2013.

* Regulated utilities can pass costs to customers – Most investor‑owned utilities operate under cost‑plus rate structures, allowing them to recover fuel‑price spikes through tariff adjustments approved by state public utility commissions.

* Dividend‑oriented investors gravitate toward stable cash flow – With equity markets rattled by inflation concerns, the First Trust Utilities AlphaDEX Fund (FTUAX) has attracted capital looking for reliable yield and defensive exposure.

Performance Snapshot: FTUAX Q3 2025 vs. Benchmark

Period	FTUAX Total Return	S&P 500 Total Return	Utilities Select Sector SPDR (XLU)
YTD (Jan‑Sep 2025)	+9.8%	+4.2%	+7.1%
12‑Month (Oct 2024‑Sep 2025)	+11.3%	+6.5%	+9.0%
3‑Year Annualized	+6.5%	+8.2%	+5.9%

Data sourced from morningstar and Bloomberg as of 26 dec 2025.

How the AlphaDEX Methodology Adds a Competitive Edge

1. Essential Ranking – The AlphaDEX model scores utilities on growth, profitability, and valuation metrics, weighting higher‑ranked stocks like NextEra Energy (NEE) and Dominion Energy (D) more heavily.
2. Quantitative Screening – Companies with a minimum 15% dividend yield and a low debt‑to‑EBITDA ratio are automatically favored, preserving capital during rate‑increase cycles.
3. Dynamic Rebalancing – The quarterly rebalancing cadence captures momentum from recent earnings upgrades while trimming lagging performers.

Key Drivers Behind FTUAX’s Recent Upswing

1. Fuel‑Cost Pass‑Through Mechanisms

* Natural gas price surge – Henry Hub futures averaged $4.12/MMBtu in August 2025, up 18% from the same month a year earlier. Utilities with sizable gas‑fired generation (e.g., American Electric Power) have increased their tariffs, boosting revenue per kilowatt‑hour.

2. renewable‑energy Incentives

* Federal Investment Tax Credit (ITC) extension – The 2024 Inflation Reduction Act extension of the ITC to 2027 has accelerated solar and storage projects, raising earnings forecasts for utilities that are early adopters.

3. Regulatory Climate Favoring Infrastructure Investment

* State‑level “grid modernization” mandates – California, Texas, and New York have approved multi‑billion‑dollar transmission upgrades, delivering predictable cash flow streams to utilities involved in the projects.

Practical Tips for Investors Looking to add FTUAX

1. Assess Yield Relative to Inflation – FTUAX’s 3‑month SEC‑reported dividend yield sits at 4.2%. Compare this to the CPI‑U (consumer price index for all urban consumers) which ran at 3.7% YoY in Q3 2025. the real yield margin remains attractive for income‑focused portfolios.
2. Check Portfolio Concentration – The fund’s top‑5 holdings represent roughly 38% of assets. Ensure your overall equity exposure aligns with your risk tolerance, especially if you hold other utility‑heavy positions.
3. Leverage Tax‑Advantaged Accounts – Because a meaningful portion of FTUAX’s return comes from qualified dividends, placing the ETF in an IRA or Roth can enhance after‑tax performance.

Risk Factors to Monitor

Risk	Potential Impact	Mitigation
Regulatory Backlash	If state commissions curb rate‑increase approvals, earnings growth could slow.	Diversify across utilities with balanced regulated and non‑regulated segments (e.g., Duke Energy’s renewable subsidiary).
Interest‑Rate Sensitivity	Higher treasury yields may make utility dividends less appealing relative to bonds.	Keep an eye on the 10‑year Treasury spread; consider a modest position size during steep yield curves.
Weather Volatility	Extreme heat or cold spikes can temporarily boost demand but also increase outage risk.	Review utilities with robust grid resilience investments (e.g., Southern Company’s smart‑grid rollout).

Real‑World Example: nextera Energy’s Q2 2025 Earnings

* Revenue: $7.3 bn (up 9% YoY) driven by higher electricity sales in Florida and expanding solar portfolio in Texas.

* Adjusted EPS: $2.87, surpassing analysts’ consensus of $2.62.

* Dividend Increase: 6% quarterly payout raise, reinforcing its status as a “core holding” in FTUAX’s top‑weight allocation.

The earnings beat contributed to a 4.1% jump in FTUAX’s net asset value (NAV) during the earnings release week, underscoring how individual utility results can materially affect the fund’s performance.

How to Track FTUAX’s Ongoing Momentum

* Morningstar Rating: 4‑star (as of 25 Dec 2025) – reflects strong risk‑adjusted returns.

* Expense Ratio: 0.58% – competitive within the utilities ETF space.

* Liquidity Metrics: Average daily trading volume of 1.2 million shares, with a bid‑ask spread under 2 basis points, ensuring easy entry and exit.

Bottom‑Line Takeaway for Active Investors

• Rising residential energy bills are directly feeding utility earnings, creating a tailwind for the First Trust Utilities AlphaDEX Fund.
• The AlphaDEX selection process filters for high‑yield, low‑debt utilities that stand to benefit most from cost‑pass‑through and renewable‑energy incentives.
• Strategic positioning-through tax‑advantaged accounts, yield‑inflation comparison, and sector diversification-can maximize the fund’s defensive upside while managing interest‑rate and regulatory risks.