Data centers fueling the AI boom are driving up the nation’s demand for electricity — and possibly your utility bill along with it.
There are several reasons power is getting more expensive in the US. Some recent academic papers have linked data centers to those rising prices, while others say it’s more nuanced than that, with factors including economic headwinds and aging infrastructure in need of upgrades.
Either way, data centers continue to proliferate at record speed. Major tech companies are rushing to build more of these facilities across the country, leaving residents and lawmakers to reckon with what the impact might be.
Keep reading to find out how much power data centers really use and what changes to look out for in your power bill.
➡️ Jump to a section:
• How much energy do data centers actually use?
• What do data centers have to do with my electric bill?
• Who regulates energy costs?
• Where are electric bills already increasing?
• What are policymakers doing about rising energy costs?
• What are some other explanations for higher costs?
• What can I do about data center development in my community?
How much energy do data centers actually use?
Data centers operate 24/7, requiring constant electricity to power the servers inside, the backup generators and the related cooling systems.
They’re among the most energy-intensive types of buildings, according to the US Dept. of Energy (DOE). These facilities use 10 to 50 times more electricity per square foot than an ordinary office building.
Altogether, US data centers used 176 terawatt-hours (TWh) of electricity in 2023, or enough energy to power more than 16 million homes for a year — more than 1 in 10 of all homes across the country.
A 2024 DOE report found that data centers use at least 4% of the nation’s electricity, a share estimated to grow to 7% or 12% by 2028. That would equal 325 to 580 TWh of power — enough, on the high end, to run all of Canada for a year.
What do data centers have to do with my electric bill?
Your monthly electric bill has two main parts that can be affected by data centers:
- The supply charge: covers the cost of producing electricity
- The delivery charge: covers the cost of getting that electricity to your home
The supply charge
How electricity is priced depends on where you live and how your regional power grid operates, but here’s a simplified version.
Grid operators manage regional electricity markets to keep supply and demand in balance. Each year, they forecast how much power their region will need a few years in the future and hold what’s called a capacity auction, which pays power plants to be ready to generate electricity when demand is high.
These payments act like insurance, ensuring there’s enough electricity to meet demand, even during extreme weather or unexpected surges. Since the overall demand for electricity is rising, so are the prices in these capacity auctions.
For example, PJM, the nation’s largest grid operator, held its most recent auction in July for the 2026–2027 delivery year. The capacity price hit $329.17 per megawatt-day, more than 10x the $28.92 price during the 2024–2025 delivery year.
So these power generators will earn about $329 each day for every megawatt of electricity they agree to keep available during the 2026 to 2027 delivery year.
Capacity prices eventually flow from grid operators to utility companies, and then to customers as part of what’s usually labeled the “supply charge.”
The delivery charge
Utility companies are spending billions to upgrade aging grid infrastructure — the poles, wires and transformers that transport electricity — to handle growing demand.
When utilities make these upgrades, the costs are shared by everyone — including households, businesses and industrial customers.
Most of this equipment is old and would eventually need replacing, but the rapid expansion of data centers may be speeding that up. In 2024 alone, utility companies in seven mid-Atlantic and Midwest states passed more than $4.3 billion in additional infrastructure costs on to customers, according to a report by the Union of Concerned Scientists.
All of this falls under the “delivery charge” on electric bills. These fees have been steadily rising over the last decade, even adjusted for inflation.
Who regulates energy costs?
The federal government, state governments and the overall economy all play a role in how much electricity costs.
The Federal Energy Regulatory Commission (FERC) doesn’t set retail electricity prices, but it is tasked with ensuring charges are “just and reasonable.” It regulates wholesale rates across state and regional lines and approves transmission fees, which cover the cost of using the network to move electricity from power plants to local distribution systems.
Below that, states have utility commissions that oversee rates, service quality and infrastructure projects. They must approve rate increases suggested by power suppliers, with a mission of keeping the structure fair and reliable.
Utility companies, on top of following these agencies’ regulations, are also influenced by market forces. Inflation, infrastructure upgrades, higher prices of power generation or other operational needs all may contribute to them sending out higher monthly bills to customers.
Generally, suppliers are required to notify customers of rate changes, which then need approval from the utility commission to go into effect.
Where are electric bills already increasing?
Some utility companies have already begun passing along higher energy and infrastructure costs to consumers.
In Ohio this summer, the average household’s electric bill increased by at least $15 per month. A major local utility and an independent grid monitor both linked the increase to the growing number of data centers, per the New York Times.
In parts of the country with more data center development, electricity prices increased even more. Monthly power bills now cost 267% more than they did five years ago in regions with “significant data center activity,” according to an analysis from Bloomberg News.
In other words, if your monthly bill in 2020 was $100, it could be $267 today.
Across the nation, bills are estimated to increase by an average of 8% by 2030, according to an analysis in June from Carnegie Mellon University and North Carolina State University.
In regions where data centers are clustered, bills could rise more steeply. In Virginia, a major data center hub, household power bills are expected to increase by more than 25% by 2030, according to the analysis.
What are policymakers doing about rising energy costs?
Policymakers are considering several ways to prevent households and businesses from shouldering higher electricity bills driven by data center demand. Here are three examples.
In Ohio, regulators recently ruled that data centers must pay for at least 85% of the power they’ve contracted, even if they use less. The goal is to cover the infrastructure costs needed to deliver power to those facilities.
Lawmakers in neighboring Pennsylvania have introduced a bill to establish new rules for data centers, and PA Gov. Josh Shapiro has threatened to leave the PJM over rising prices, calling for states to have more say in grid policy.
Across the country in Oregon, lawmakers over the summer passed the POWER Act, directing regulators to protect households from higher rates and requiring utilities to charge large energy users like data centers for the costs they add to the system.
Some tech leaders have pushed back, claiming these measures are “discriminatory” and arguing that data centers generate jobs and tax revenue. Other lawmakers say the local benefits aren’t as clear, especially when electricity costs climb for everyone else.
What are some other explanations for higher costs?
Several other factors beyond data centers may be driving up energy bills.
Inflation plays a role, but the main reason is the growing need to upgrade the aging power grid. The old poles and wires that carry electricity to homes often need replacing. Fires, floods and other natural disasters intensified by climate change are damaging equipment more often, increasing the demand for repairs and new infrastructure.
Plus, more people and industries are using more power.
After years of relatively flat electricity demand, consumption is now on the rise. That’s due to electrification, like the spread of electric vehicles, a resurgence in manufacturing and, of course, the rapid growth of data centers.
What can I do about data center development in my community?
It depends on where you live, but generally, speak up to state and local representatives.
A Tech Policy Press analysis lists more than 300 proposed and passed bills related to data centers, helpfully categorized by state.
County and township level meetings often have a lot of sway, too. Especially in rural areas, residents have been speaking up to voice concerns and benefits.
As regulations change, keep an eye out for public comment opportunities. Utility commissions, like the one in Pennsylvania, regularly seek input to guide their oversight.
