The escalating power consumption by Artificial Intelligence (AI) data centers is rapidly becoming a key factor in the rising electricity expenses for American households. These massive computing facilities, essential for developing advanced AI models, demand immense quantities of energy. As major technology companies accelerate their efforts to bring more data centers online, the appetite for electricity has surged dramatically. This burgeoning demand is translating into higher wholesale power costs, which are subsequently reflected in the monthly utility bills of consumers, impacting household budgets across the nation.
A recent analysis, supported by the Department of Energy, projects a significant increase in the electricity consumption of data centers. By 2028, these facilities are expected to account for an astonishing 12% of all electricity generated in the United States. This represents a substantial leap from just 2% in 2019 and 4.4% in 2023, underscoring the rapid expansion and energy intensity of the AI industry. This trajectory suggests a continued upward pressure on electricity prices as the energy grid grapples with the growing requirements of these digital behemoths.
A notable example of this trend is observed within the operational area of PJM Interconnection, an electrical grid operator that serves thirteen states and Washington D.C., encompassing Virginia’s prominent “data center alley.” This region hosts a concentration of data centers operated by major tech corporations. At PJM's recent annual auction, which determines the wholesale price of electricity, costs in many areas experienced an astounding increase, in some cases soaring by more than tenfold compared to previous years. These elevated capacity charges have already begun to affect consumers within the PJM service territory.
Beginning in June, residents served by PJM have seen these increased costs materialize as additional charges on their electric bills. Reports from the Institute for Energy Economics and Financial Analysis indicate that consumers in western Maryland are paying an extra $18 per month, while those in Ohio face an additional $16, and households in Washington D.C. are seeing an increase of approximately $10. Furthermore, the most recent PJM auction for the 2026-2027 period revealed yet another jump in capacity costs. This suggests that the 67 million customers within PJM's service area could experience a further increase of up to 5% in their electric bills once these new rates become effective next June.
While PJM Interconnection represents just one grid operator, its experiences often serve as an indicator for broader trends in electricity pricing across the country. Data from the U.S. Energy Information Administration (EIA) highlights a national pattern of rising residential electricity costs. The average retail price of a single kilowatt-hour of electricity in the U.S. climbed from 16.41 cents in May 2024 to 17.47 cents a year later. The EIA further anticipates that these costs will surpass 18 cents by the close of 2026, reinforcing the widespread impact of increasing energy demand, significantly driven by the expansion of AI infrastructure.