Data centers consume enormous amounts of electricity, forcing utilities to build expensive new power plants, transmission lines, and grid upgrades. Utilities typically spread these costs across all customers, meaning residents and small businesses pay higher electric bills, even when data centers receive special discounted rates. This shifts financial risk away from corporations and onto everyday ratepayers.
Key Facts
- A single data center can use as much electricity as 100,000 homes (Carla Walker and Ian Goldsmith).
- Bloomberg found that electricity costs up to 267% more for a single month than it did five years ago in areas located near significant data center activity (Josh Saul, Leonardo Nicoletti, Demetrios Pogkas, Dina Bass, and Naureen Malik).
- In the PJM electricity market (Pennsylvania-New Jersey-Maryland Interconnection), data centers accounted for an estimated $9.3 billion price increase in the total amount of electricity that providers in the region commit to supplying. This is causing the average residential bill in the area to rise by between $16-18 per month (Rebecca Leppert).
- Utilities in seven states (Illinois, Maryland, New Jersey, Ohio, Pennsylvania, Virginia, and West Virginia) passed more than $4.3 billion in transmission connection costs for large data centers onto all ratepayers in 2024 due to outdated rules that fail to assign costs to the companies causing them (Midwest Environmental Advocates).
- Independent research confirms utility rates rise for residents as infrastructure costs are passed on. Researchers estimate U.S. consumers will pay billions of dollars to build the new power plants and infrastructure needed to serve Big Tech, 13 as data center energy use is expected to triple by 2030 (Media Justice).
Frequently Asked Questions (FAQs)
- Q. Why do data centers affect electricity bills?
A. Their extreme energy use requires utilities to build new infrastructure, and those costs are spread across all customers.
- Q. Do data centers pay the full cost of the electricity they use?
A. Often no. Many receive discounted “economic development” rates while residents pay more.
- Q. Who pays for new power lines and grid upgrades?
A. Ratepayers, households and small businesses, not the data center companies.
- Q. Are these utility deals transparent?
A. Frequently not. Many are approved through complex regulatory processes with limited public input.
- Q. Do studies confirm higher rates for residents?
A. Yes. University of Michigan research shows data centers increase local electric rates.
Resources/ Sources
- Eliza Martin, Ari Peskoe: Extracting Profits from the Public. Explains how utilities socialize infrastructure costs while large energy users receive preferential treatment.
- Kelly House: As Data Center Boom Hits Michigan, Utilities Hedge Against a Bust. Reports on utilities expanding infrastructure due to data center demand and the risks shifted to customers.
- MN Omnibus Energy, Utilities, Environment and Climate Policy. Covers Minnesota legislation impacting energy infrastructure expansion tied to data centers.
- David W. Chen: 'The New Price of Eggs.' The Political Shocks of Data Centers and Electric Bills. Examines how data center growth is driving higher electricity costs for residents.
- Media Justice: The Costs of Data Centers to Our Communities. Organizer guide explaining how energy costs are shifted onto residents.
- Midwest Environmental Advocates: Hyperscale Data Centers in Wisconsin. Toolkit outlining unchecked energy expansion driven by Big Tech.
- Janine Jackson: Media Need to Report on the Real Cost of Data Centers. Critiques media coverage that downplays rising utility costs.
- Susan Cosier: Illinois Data Centers Are Draining Aquifers and Raising Water Costs. Shows how utility strain increases both energy and water bills.
- Chesapeake Climate Action Fund and Global Strategy Group: Virginians' Views of Data Centers and Rising Energy Costs. Polling shows public concern about higher electricity bills.
- Adam Mahoney: Data Centers and Black Communities in the South. Reports on how rising utility costs disproportionately impact Black communities.
- Dr. Margaret Cook: Thirsty Data: The Hidden Water and Energy Costs of Texas' Data Center Boom – Houston Advanced Research Center. Explains the combined energy and water costs of the Texas data center boom.
- Bad Data Centers- Utilities
- Mandy DeRoche, Jeremy Fisher, Nick Thorpe, Megan Wachspress: The Energy Bomb. Explains how energy-intensive computing worsens the climate crisis.
- Naureen S. Malik: Data centers added $6.5 billion to big US grid's power cost. This report highlights how the rapid growth of data centers contributed to a massive $6.5 billion surge in power costs across a major 13-state U.S. grid, leading to increased electricity bills for households and local businesses.
- Josh Saul, Leonardo Nicoletti, Demetrios Pogkas, Dina Bass, and Naureen Malik: How AI Data Centers Are Driving Up Electricity Prices for Everyone. This investigative graphic report analyzes the relationship between the rapid growth of AI infrastructure and the rising cost of utility bills for residential consumers.
- Rebecca Leppert: What we know about energy use at U.S. data centers amid the AI boom. This report highlights that U.S. data centers consumed 183 terawatt-hours of electricity in 2023, accounting for roughly 4.5% of total national electricity generation as demand continues to rise.
- Carla Walker and Ian Goldsmith: How the US Data Center Boom Could Push the Electric Grid to Its Limits. This article examines the immense resource needs of modern infrastructure, noting that a single large AI data center can require as much electricity as 750,000 homes.