AI data centers trigger 76% electricity price spike as federal watchdog demands tech giants pay

AI data centers trigger massive 'irreversible' 76% electricity price spike in largest US region -- federal watchdog demands tech giants pay for their own power infrastructure

Data centers are skewing the power supply market, resulting in higher prices for everyone. Monitoring Analytics, the federally mandated independent watchdog that keeps an eye on the critical PJM Interconnection that distributes power around the U.S., said in a new report [PDF] that a massive 75.5% increase in power costs in the largest region of the U.S. has been directly caused by data centers, and it also blamed the regional market operator for failing to keep up with the rising demand. The price increases have been steep; wholesale electricity prices went up from $77.78 per MWh in the first quarter of 2025 to $136.53 per MWh in the same period of this year. "The price impacts on customers have been very large and are not reversible," the watchdog said in the report. "The price impacts will be even larger in the near term unless the issues associated with data center load are addressed in a timely manner, prior to the next BRA (base residual auction), scheduled for June 2026." Monitoring Analytics says that PJM Interconnection is trying to rewrite the rules for the capacity market and bake in data center demands into its forecasts. The watchdog is critical of this proposal as it will raise the prices for all electricity consumers, putting an unnecessary burden on households and small businesses. There is a possible solution to this problem: make data centers and other major consumers negotiate directly with power producers instead of mixing that demand with the BRA. This auction is where capacity is sold some three years ahead of when it's needed, and including data center demand in the BRA will push prices up for everyone. In fact, the report says that without the AI infrastructure built out, the PJM Capacity Market would not have seen the high prices we're experiencing now. So, by making data centers negotiate directly with power producers, this will ensure that the expanded capacity is solely shouldered by these large consumers and help keep utility bills stable for everyone else. However, this is not within the interests of PJM Interconnection. After all, by keeping massive data center loads baked into the general capacity forecast, the power auction would result in higher prices as demand moves up, but supply stays at relatively the same level. This higher cost, in turn, would then be passed on to transmission operators and local utilities, eventually making its way into the bill of the individual consumer. The increasing backlash against data center development, particularly its impact on electricity prices, has caught the attention of the federal government. In March of this year, President Donald Trump gathered some of the country's biggest AI hyperscalers in the White House and made them promise that they would "pay their own way" when it comes to AI infrastructure costs. This is, in principle, what Monitoring Analytics is pushing for: have tech companies pay for their own power -- both the electricity they consume, and the infrastructure needed for it. Unfortunately, the "ratepayer protection pledge" is nothing but a promise, and it cannot force institutions like PJM Interconnection to not pass on the burden of cost to the average American unless Congress passes a federal law that forces the Federal Energy Regulatory Commission (FERC) to prevent cost-shifting. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Power Prices in Eastern U.S. Spike 76% Thanks to AI Data Centers

America's largest power grid is under enormous strain from AI data centers. And a new report details how wholesale electricity prices have jumped nearly 76% in an area where tens of millions of Americans live. PJM Interconnection operates a wholesale electric power market in the mid-Atlantic, Midwest, and South that covers 67 million people in 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia). That's nearly 20% of the U.S. population, and it's also an area with a lot of data centers. Power prices there averaged $136.53 per megawatt-hour in the first three months of 2026, according to a massive new report from Monitoring Analytics. That's up from $77.78 per megawatt-hour in the first three months of 2026. The report isn't shy about where we should put the blame: "Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices." The report, first spotted by Bloomberg, warns that there simply isn't enough capacity to meet the demand from data centers that have been built to power the AI revolution. "The current supply of capacity in PJM is not adequate to meet the demand from large data center loads and will not be adequate in the foreseeable future. This is a simple factual issue," the report explains. There's no easy way to reverse this trend, according to Monitoring Analytics. It's just going to be the reality for the next couple of years: "Large data center load additions have already had a significant and irreversible impact on PJM customers that will be paid through May 31, 2028, and will have additional significant impacts on other customers as a result of higher transmission costs, higher energy market prices and higher capacity market prices." The power mix has shifted slightly, with less dependence on coal and wind, but more on oil and solar, according to the report: "In the first three months of 2026, generation from coal units decreased 1.7 percent, generation from natural gas units increased 4.2 percent, generation from oil units increased 43.2 percent, generation from wind units decreased 4.7 percent, and generation from solar units increased 15.0 percent compared to the first three months of 2025." AI data centers are incredibly unpopular in the U.S., with 71% of Americans saying they oppose the construction of data centers in their area, according to a new poll from Gallup this week. Of that 71%, 23% say they're just somewhat opposed, while 48% say they are strongly opposed. Incredibly, more Americans say they'd rather live next to a nuclear power plant than a data center. A relatively small 53% of Americans oppose the development of nuclear power plants in their area. Among those polled, 50% cite the heavy strain on local resources, including many who are concerned about the way that data centers use electricity and drive up prices.