“We’re now at a stage where AI and data centers that power it are competing directly with humans for land and water and energy.” – Harvard School of Public Health
Electricity prices are rising nationwide as tech companies scramble to bring more data centers online to fuel their AI ambitions.
The nation’s largest grid company, PJM Interconnection, plans to increase prices by more than 20% this summer, citing low supply as electricity demand from data centers spikes, Reuters reports. The cost of electricity has risen sharply nationwide since 2020, and continues to outpace inflation, according to the US Energy Information Administration.
PJM operates in 13 states in the Northeastern US, including parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia, according to its website.
The situation is so bad in Pennsylvania, where businesses are seeing a 29% increase, that its governor is threatening to abandon the service if it cannot bring prices down. PJM CEO Manu Asthana announced in April that he will step down at the end of 2025.
PJM’s coverage area (Credit: PJM)
When ChatGPT’s popularity exploded in 2023, tech giants began placing enormous bids in annual power grid auctions to secure capacity for their data centers. In PJM’s 2024 auction, the going rate for power plants jumped 800%, from $269.92 per megawatt-day, compared to $28.92 the year before. The “proliferation of new data centers, [is creating] major pockets of significant load growth,” PJM wrote in its 2024 annual report.
“Prices will remain high as long as demand growth is outstripping supply–this is a basic economic policy,” PJM spokesman Jeffrey Shields tells Reuters. “Right now, we need every megawatt we can get.”
PJM says external factors are hampering its ability to meet demand. It blames the abrupt closure of fossil-fuel powered plants and says it’s unable to quickly process some 2,000 applications from renewable power projects to make up for it. Overloaded, PJM paused new applications in 2022, exacerbating the shortage.
“We need speed from PJM, we need transparency from PJM and we need to keep consumer costs down with PJM,” Pennsylvania Governor Josh Shapiro tells Reuters. “I think they’ve taken some steps in that direction which is really encouraging to me and we’re going to continue to work at it.”
Chatbots consume roughly 10 times the amount of energy as a typical Google search. Even little things like saying “please” and “thank you” to ChatGPT are costing OpenAI “tens of millions of dollars” in electricity bills, CEO Sam Altman says. ChatGPT’s daily consumption in 2024 matched that of 180,000 households. Forbes reports. Its user base has continued growing rapidly since then.
It’s not just OpenAI—all Big Tech firms are scrambling to secure more grid power to fuel their AI ambitions. Google saw a 27% annual increase in electricity in its 2025 environmental review, along with a 51% increase in carbon emissions since 2019, The Guardian reports. It also used enough water to irrigate 54 golf courses, primarily to cool data center. This was already reaching unstainable levels before ChatGPT.
“We’re now at a stage where AI and data centers that power it are competing directly with humans for land and water and energy,” a Harvard School of Public Health data scientist said at the DC Climate Week conference in May, according to ESG Dive.
Nuclear power has emerged as a potential solution, but as we’re seeing with PJM, the transition will take time and energy bills could start to look a little frightening in the interim. Microsoft is reviving Pennsylvania’s Three Mile Island to power its AI products, such as Copilot. Amazon and Google have also signed agreements for nuclear projects, Fox Business reports.
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Eye-Popping Electric Bills Come Due as Price of AI Revolution
Even if you’ve never used ChatGPT or generated an AI image, chances are you’re already paying for it.
The artificial intelligence boom is driving a surge in electricity demand across the United States, as data centers powering AI tools like large language models (LLMs) and image generators consume massive amounts of energy. That demand is pushing up household power bills and straining the country’s electric grid, leaving millions of Americans footing the bill.
This summer, electricity bills surged across the eastern United States. In Trenton, New Jersey, the average home’s monthly bill rose by $26. In Columbus, Ohio, it climbed $27, driven largely by rising costs in the region’s wholesale power markets. According to figures from AEP Ohio and regional monitors, demand from data centers is a key factor behind those increases.
The latest data from the U.S. Energy Information Administration backs that perception. In May 2025, the average U.S. household paid 17.47 cents per kilowatt-hour, up from 16.41 cents a year earlier—a 6.5 percent increase. Some states saw much sharper spikes, including Maine (up 36.3 percent) and Connecticut (18.4 percent).
AI Data Centers Strain Power Markets
The pressure on the grid is even more extreme in electricity managers like PJM, a little-known company that operates the electric grid that serves more than 67 million people across 13 states in the eastern U.S. In December 2024, capacity prices jumped from $30 to $270 per megawatt-day—a ninefold increase that triggered lawsuits and political backlash. Pennsylvania sued PJM, Maryland passed emergency legislation and New Jersey’s governor demanded the CEO’s resignation.
At the heart of the price surge are massive data centers built to support AI. According to PJM’s independent market monitor, Monitoring Analytics, roughly three-quarters of the capacity price hike was tied to demand from current and planned data centers. The watchdog estimates an additional $9.3 billion in future costs will start hitting consumer bills this month.
“These are not your average server farms,” said Abraham Silverman, an energy researcher at Johns Hopkins University. “AI training centers—hyperscale facilities—can draw hundreds or thousands of megawatts at a single site. It’s like building five nuclear plants into the grid every year, just for AI.”
Silverman said current energy planning systems are outdated. “We’re nowhere close to being able to meet this demand as a society,” he said. “Our models still assume flat electricity growth. That’s not our reality anymore.”
In a recent analysis, he found that auction prices could result in consumer costs doubling—from $6 billion to nearly $15 billion annually—due to AI-driven data center demand. “That’s a massive transfer of cost. The question is: who’s going to pay it?”
Even as utilities invest in infrastructure, many large-scale data center projects don’t cover the full cost of the substations and transmission lines needed to serve them. A report by the analytics firm Wood Mackenzie found that in most cases, utilities end up shifting these costs onto other customers or absorbing them entirely.
“Utilities either need to socialize the cost to other ratepayers or absorb that cost—essentially, their shareholders would take the hit,” said Ben Hertz-Shargel, head of grid edge research at Wood Mackenzie, in an interview with The New York Times.
Big Tech’s Billions Meet an Aging Grid
Major tech firms are racing to expand their AI infrastructure. Microsoft plans to spend $120 billion on data centers. Meta expects up to $72 billion in capital expenditures this year. Google is investing $25 billion in facilities across the PJM region alone.
To keep pace, utilities are increasingly relying on aging fossil fuel plants to generate enough electricity to meet the crushing demand. Dominion Energy, which serves much of Virginia, has asked regulators to require large-load customers to pay a fairer share of grid upgrade costs. Without reform, electricity prices in parts of Virginia are expected to climb as much as 25 percent by 2030.
Silverman said the problem isn’t that data centers are coming—but how they’re connecting to the grid. “States should welcome this investment,” he said. “But they need to make data centers bring their own clean energy, sign long-term utility contracts, and post financial collateral. Otherwise, prices are just going to keep going up.”
The Trump administration has adopted an “all of the above” approach, fast-tracking permits for fossil fuel plants, nuclear power, and hydropower to meet surging AI energy demands. At the same time, it has scaled back federal support for wind and solar development.
“Wind and solar are the fastest resources to deploy,” said Paulina Jaramillo, professor of Engineering and Public Policy at Carnegie Mellon University. “But this administration is doing everything it can to stop their development. That puts us at serious risk of brownouts and blackouts.”
She added: “Electricity markets in restructured regions are cracking. We’re missing the coordinated planning we need. No single entity is responsible for long-term system design anymore.”
Electric Bills Rise, Emissions Climb
The rising costs aren’t a temporary blip. According to Arbor, an energy savings platform, average U.S. household electricity prices have more than doubled since 2004—from about 9 cents per kilowatt-hour to 19 cents today. Since 2020, prices are up 34 percent.
“If we don’t modernize the grid now, power bills will be volatile, unpredictable, and unaffordable,” said Arbor founder Andrew Meyer.
Meanwhile, a June 2025 analysis by Carnegie Mellon and North Carolina State University warned that under current policies, national wholesale electricity prices could rise 8 percent and annual CO₂ emissions could increase by 275 million metric tons by 2030—the equivalent of adding France’s entire carbon footprint to the U.S. grid.
“Without policy changes, this is what we’re locking in,” Jaramillo said. “We will pay for it one way or another.”
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