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What You're Noticing

Why Is My Electric Bill Higher?

Your electricity bill has likely increased in recent years. Here's how data center demand connects to residential rate increases, and what's being done about it.

6 min read

Key Takeaways

  • 1 Residential electricity prices rose 25% from 2020 to 2024
  • 2 In PJM's 13-state region, data centers drove 63% of a $14.7 billion capacity cost increase
  • 3 Several states are now requiring data centers to pay more of their infrastructure costs

You've Noticed Your Bill Is Higher

You've seen it: the electric bill is higher than it used to be. Maybe you assumed it was inflation, or that you were using more power. But households across the country are experiencing increases that go beyond normal market fluctuations.

+25%
Residential Prices
2020–2024
-2%
Industrial Prices
2020–2024

Household electricity use has grown the least of all sectors, yet that's where prices have risen the most. What's going on? The answer increasingly points to one industry: data centers.

How Electricity Rates Work

Your electric bill includes several components: the cost of generating electricity, transmitting it long distances, distributing it locally, and ensuring there's enough capacity available during peak demand. When utilities need to build new infrastructure to serve growing demand, those costs get passed on to customers.

Traditionally, costs get spread across all customers based on formulas that charge residential users higher per-unit rates than large industrial users. But this creates a problem: when massive new industrial users join the grid, the infrastructure costs to serve them often get spread across all ratepayers—including you.

For a deeper look at how the grid operates, see How the Electric Grid Works →

The Data Center Connection

Here's the logical chain: Data centers require enormous amounts of electricity—a single large facility can use as much power as 750,000 homes. When many data centers connect to a regional grid, utilities must build new power plants, transmission lines, and substations to serve them. Those construction costs get incorporated into the rates everyone pays.

PJM Interconnection Case Study 13 states + D.C. • 65 million people
$14.7B
2025-26 Capacity Costs
800%
Increase from prior year
63%
Attributed to data centers

$9.3 billion in additional costs that will be recovered from customers through higher rates.

Washington, D.C.: Pepco customers saw bills increase by an average of $21 per month starting June 2025. About half—$10 per month—is attributable to the capacity market price spike driven by data center demand.

For more on why data centers require so much power, see The Power Constraint →

What's Changing

The political backlash is starting to produce results. Several states have created new rate structures to shift more infrastructure costs onto data centers rather than residential customers.

Virginia
Effective January 2027

New rate class requires data centers to pay minimum charges regardless of actual usage—ensuring they cover infrastructure costs even during low-demand periods.

Ohio
Data Center Tariff

Requires minimum monthly bills based on at least 85% of expected energy use, plus exit fees if projects are canceled.

Georgia
Large-Load Requirement

Customers using more than 100 MW must cover transmission and distribution costs incurred during construction.

Federal
SHIELD Act (Proposed)

Would prevent households from paying for grid upgrades that serve energy-intensive large-load facilities.

Next Steps

Understanding the connection between data centers and your electric bill is the first step. Here's what you can do next:

  1. Request a bill breakdown from your utility showing how charges have changed over the past few years
  2. Follow rate cases in your state—when utilities file for increases, you can submit public comments
  3. Contact your representatives about bills like the SHIELD Act that would shift costs to data centers
Take Action Resources for Citizens

Go Deeper

Chapters 4 and 5 of This Is Server Country examine how utility rate structures often favor large industrial users over residential customers, why current cost allocation practices developed, and what reforms could create a fairer distribution of costs.

Learn more about the book