Soaring electricity prices fuel backlash against AI data centers

Voter anger over rising electricity prices is fueling political backlash against the AI ​​industry’s data centers; Democrats accuse the Trump administration of failing to address the problem as they focus on affordability ahead of next year’s midterm elections.

Abigail Spanberger won last week’s race for governor in Virginia, home to the world’s largest concentration of data centers, after promising to change the industry for the better.pay their way and their fair share“Due to rising electricity costs.

New Jersey governor-elect Mikie Sherrill made the promise declare a state of emergency On his first day in office, he froze prices in the Garden State because of utility bills. Two Democrats have been elected to the commission that regulates Georgia’s utilities. breaking total Republican control, While one of the candidates is debating Prices are rising in the Peach State partly due to data centers.

On the heels of their election victory, Democratic senators in Washington, led by Sen. Richard Blumenthal of Connecticut and Sen. Bernie Sanders of Vermont, this week took aim at what they described as the White House’s “sweetheart deals with Big Tech companies” and accused the administration of failing to protect consumers from being “forced to subsidize the cost of data centers.”

“As a result, Americans are already having to fight wars with trillion-dollar corporations to keep the lights on in their homes,” senators wrote in a letter Monday demanding solutions from the White House.

President Donald Trump promised Reduce families’ electricity bills by 50% in his first year in office. However, housing prices in the United States increased by an average of 6 percent in August compared to the same period in 2024 across the country. Energy Information Management. During the same period, prices rose about 21% in New Jersey, 13% in Virginia, and about 5% in Georgia.

Abraham Silverman, who served as general counsel to New Jersey’s utilities board from 2019 to 2023 under outgoing Democratic Gov. Phil Murphy, said the reasons for the price increases vary by state and region.

But Silverman said data centers are playing a major role in increasing bills on the PJM Interconnect power grid, which serves New Jersey and Virginia. PJM is the largest network in the United States, reaching more than 65 million people in 13 states in the Mid-Atlantic and parts of the Midwest and South.

“We’re basically adding new electricity users the size of Philadelphia to the grid every year, starting in 2025 and showing no signs of slowing down,” Silverman said of the national increase in demand. “Where is this load growth coming from? The answer is in data centers.”

rising prices

The conditions that caused household electricity prices to soar this year, especially in the PJM region, took root before the second Trump administration took office, when investment in AI data centers was just beginning to pick up.

The amount PJM agreed to pay in late 2022 totaled $2.2 billion to secure the capacity of the power plants to ensure they are available when electricity use increases. By 2024, the bill has increased by over 500% to $14.7 billion. This year, it increased by 9% to 16.1 billion dollars.

The independent watchdog that tracks PJM found the main culprit for rising capacity prices: data centers.

“Current conditions in the capacity market are almost entirely the result of large load additions from data centers, both actual historical and forecast,” watchdog Monitoring Analytics concluded in its independent market monitor. Report published in June.

These capacity prices are ultimately reflected in household electricity bills, Silverman said. “This is an extremely large component of the economic crisis we have right now.”

New Jersey utility PSE&G, owned by Public Service Business Group, acknowledged the impact of the explosion in capacity prices February letter to consumers Although it did not call data centers, it warned of a 17% increase in its bills.

“Utilities do not make a profit from electricity supply; these costs are passed directly on to customers,” the company said.

As data center construction accelerates, the problem may get worse — at least for now. For example, power used by data centers in advanced stages of planning in Pennsylvania rose to 20.5 gigawatts in the third quarter, up more than 40% from 14.4 gigawatts previously, according to the utility. P.P.L.. This is equivalent to the energy consumption of approximately 17 million US homes.

“I want to make it clear that these load increases are real and are coming fast and furious,” PPL CEO Vincent Sorgi said in its latest earnings call. he said. “The bottom line is that we need to start building the next generation as soon as possible.”

Rob Gramlich, president of energy industry consulting firm Grid Strategies, said residential electricity bills are unlikely to fall this decade as demand is expected to remain high and supply constrained.

political blame game

Democratic senators accused the Trump administration of worsening the affordability problem with its attacks on renewable energy. Trump has sought to halt the expansion of wind energy, particularly offshore wind projects, and has signed local legislation A Big, Beautiful BillPhases out tax credits for renewable energy.

While solar power, battery storage and wind account for more than 90% of projects waiting to be connected to the grid, renewable energy is the most readily available generation source to meet new demand, according to August data from consulting firm Enverus. Sherrill and Spanberger campaigned on expanding renewable energy in New Jersey and Virginia, not to cut carbon emissions but to help lower energy costs.

The White House blames the Biden administration and its renewable energy policies for the increase in electricity prices. Trump “declared an energy emergency to reverse four years of Biden’s disastrous policies and accelerate large-scale energy production” grid infrastructure “We will accelerate the expansion of coal, natural gas and nuclear energy production,” White House spokesman Taylor Rogers said in a statement.

Silverman said the AI ​​industry needs to pay for the next generation and transmission needed to support data centers. “If we do that, it would really go a long way toward protecting mom and pop consumers from high costs,” he said.

The Data Center Coalition, a lobby group, said in a statement that “the industry is committed to paying the full utility cost of the energy it uses.”