The surge in artificial intelligence (AI) infrastructure is driving a sharp rise in electricity bills across the US. AI data centers now consume about 4% of the country's electricity, and this share is expected to rise sharply as demand for generative AI accelerates. This increased energy consumption is due to the massive data centers required to train and run AI models, such as those used for ChatGPT.
As a result, average annual power bills in many states are rising faster than inflation, with some states seeing increases of over 6%. In New Jersey, utility bills have become a significant issue in a gubernatorial race that has gained national attention. In Ohio, typical households began paying at least $15 more per month starting in June due to added demand from new data centers.
The reason households are paying more is that utilities are shifting AI infrastructure costs onto consumers through increased electricity rates. Confidential special contracts between utilities and data centers often conceal the overall project costs, making it difficult for regulators to scrutinize. The current pricing system is flawed, with billions in extra charges collected but little new power supply delivered.
To address this issue, some potential solutions have been proposed, including charging data centers higher rates or forcing them to buy more renewable energy. Other options include letting states step out of the current pricing system, requiring data centers to commit to long-term power purchase agreements to support new plants, or developing private energy parks that isolate data center costs from utility ratepayers.
The International Energy Agency (IEA) warns that electricity demand from data centers worldwide will more than double by 2030, with AI driving this surge. Some experts estimate that electricity rates for individuals and small businesses could increase by up to 25% in states like Virginia. Regulators and lawmakers are pushing back against the rising costs, but solutions will take time to implement.
