Key Takeaways
- Artificial Intelligence (AI) data centers are claiming a growing percentage of electricity generated in the U.S., driving up prices for consumers along the way.
- PJM Interconnection, which serves Virginia’s “data center alley,” has seen wholesale costs increase more than tenfold the past two years.
- Capacity costs have been passed on to consumers, who are already paying more per month on their electric bills.
If your electric bill has been higher than expected this summer, you’re not alone. The reason why, though, isn’t just sweltering temperatures—it’s artificial intelligence (AI).
Data centers, the massive computing facilities used to develop advanced AI models, require immense amounts of power. As Big Tech firms have raced to bring data centers online, demand for electricity has skyrocketed. A Department of Energy backed report estimates that data centers could command up to 12% of all electricity generated in the U.S. by 2028, up from 4.4% in 2023 and just 2% in 2019.
Datacenter Power Charges Get Passed On To Consumers
Take PJM Interconnection, an electrical grid operator serving 13 states and Washington D.C., including Virginia’s so-called “data center alley,” where Amazon (AMZN) and others have set up shop. PJM has an annual auction that determines the price of wholesale electricity, and at last year’s auction, the cost in most areas jumped more than ninefold.
Those capacity charges got passed onto PJM consumers starting in June, to the tune of an extra $18 per month in western Maryland, $16 a month in Ohio, and about $10 in Washington D.C., according to the Institute for Energy Economics and Financial Analysis.
PJM’s auction for the 2026-2027 year happened last month, and capacity costs jumped again. The grid operator estimates that its 67 million customers could see their electric bills increase as much as 5% when the new rates go into effect next June.
PJM is just one grid operator, but it’s considered something of a bellwether for prices across the country. Nationally, the average retail residential cost of a single kilowatt-hour of electricity has already jumped from 16.41 cents in May 2024 to 17.47 cents a year later, according to the U.S. Energy Information Administration (EIA). The EIA projects costs will rise to above 18 cents by the end of 2026.