States Grapple with Rising Electric Bills as Data Centers' Energy Consumption Surges

Reviewed byNidhi Govil

5 Sources

As electricity costs increase, states are under pressure to protect consumers from the growing energy demands of Big Tech data centers, with evidence suggesting that these facilities are contributing significantly to higher bills.

Rising Electric Bills and Data Center Energy Consumption

As electric bills continue to rise across the United States, mounting evidence suggests that energy-hungry data centers operated by Big Tech companies are contributing significantly to the problem. States are now under increasing pressure to protect regular household and business ratepayers from bearing the costs of these massive facilities' power consumption 1.

Source: AP NEWS

Source: AP NEWS

Charlotte Shuff of the Oregon Citizens' Utility Board, a consumer advocacy group, notes, "There's a massive outcry. More people are speaking out at the public utility commission in the past year than I've ever seen before" 2.

The Scale of Data Center Energy Consumption

Some data centers require more electricity than cities the size of Pittsburgh, Cleveland, or New Orleans, dwarfing even large factories in comparison. This unprecedented energy demand is forcing policymakers to reconsider the traditional system of distributing transmission costs proportionally among consumer classes 3.

Ari Peskoe, director of the Electricity Law Initiative at Harvard University, points out, "A lot of this infrastructure, billions of dollars of it, is being built just for a few customers and a few facilities and these happen to be the wealthiest companies in the world" 4.

Evidence of Data Centers' Impact on Electric Bills

Recent research provides compelling evidence of data centers' role in driving up electricity costs:

  1. Wood Mackenzie, a data and analytics firm, published a report suggesting that proposed or effective specialized rates for data centers in 16 states are insufficient to cover the cost of a new natural gas power plant 5.

  2. Monitoring Analytics, the independent market watchdog for the mid-Atlantic grid, found that 70% (or $9 billion) of last year's increased electricity cost was due to data center demand 1.

State Responses and Regulatory Actions

More than a dozen states have begun taking steps to address the issue:

  1. In Oregon, lawmakers passed legislation in June 2025 ordering state utility regulators to develop new, presumably higher, power rates for data centers 2.

  2. New Jersey's governor signed legislation commissioning state utility regulators to study potential "unreasonable rate increases" related to data center connections and develop specialized rates for these facilities 3.

  3. Five governors, led by Pennsylvania's Josh Shapiro, have pushed back against power prices set by the mid-Atlantic grid operator, PJM Interconnection, after rates spiked nearly sevenfold 4.

Challenges in Regulating Data Center Energy Consumption

Despite these efforts, regulating data center energy consumption and ensuring fair cost distribution remains challenging:

  1. The actual effect of data centers on electricity bills is difficult to pinpoint precisely.

  2. Some critics question whether states have the resolve to take a hard line against tech giants like Microsoft, Google, Amazon, and Meta 5.

  3. State laws often don't require large power users like data centers to publicly disclose their electric usage, making it challenging to determine if they're paying their fair share of transmission costs 1.

As the debate continues, states are grappling with the complex task of balancing the energy needs of data centers, which are crucial for technological advancement and AI development, with the financial interests of everyday consumers and businesses.

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