Data Centers Didn't Jack Up Your Bill—Utility Greed Did | Opinion

Your electricity bill has risen once more, and you may believe the cause is data centers, AI usage, and tech companies. However, this analysis presents a different diagnosis, as the real issue lies with utility greed. The demand from data centers, manufacturing, and electrification is on the rise, leading utilities to spend billions to keep up.

Residential electricity prices have increased by 7.3 percent since April 2025, with some states experiencing even higher jumps. Anger from consumers and political pressure for solutions have grown, but before blaming data centers, it's essential to examine the existing model. Utilities receive a monopoly over their service territory, allowing them to earn a guaranteed return on capital investments such as substations, transmission lines, and power plants.

This system incentivizes spending, leading utilities to build more when demand rises, rather than optimizing or innovating. The average American grid operates at roughly half its capacity most of the year, and peak demand events only last a few dozen hours annually. Despite this, bills remain high due to costs driven by peak demand.

Some utility companies within PJM, the largest regional grid serving 65 million people across 13 states and the District of Columbia, are seeking control over new power generation. This could result in higher electricity rates for consumers. An example is Georgia Power's Vogtle nuclear plant, which took 15 years and cost $35.8 billion—more than double its projected timeline and budget.

The Georgia Public Service Commission approved passing most of these overruns directly onto customers, while investors were protected. Utilities often overestimate load growth, and the speculative nature of data center demand has exacerbated this error. After Ohio regulators demanded more rigorous proof of projected data center load, AEP Ohio's demand forecast dropped by 80 percent.

While PJM's capacity auction has caused price spikes and interconnection backlogs, the response should be to fix the markets, not abandon competition. Energy storage, like batteries, can unlock latent grid capacity and reduce the need for new generation. Large flexible loads, such as data centers, can also help reduce consumption during grid stress events, turning the supposed villain into part of the solution.

Competitive markets offer a meaningful check on the "build-at-any-cost" impulse. Interconnection reforms have reduced processing timelines, and performance-based ratemaking aligns utility earnings with outcomes rather than capital expenditure. The proposed Reliability Backstop Procurement allows utilities to commit to new capacity only if competitive markets cannot deliver it, balancing capacity commitments with new generation's long lead times.

Americans deserve a serious response to the growing demand surge, but expanding monopoly control at a time when competitive alternatives are working would be a costly mistake. To fix the issue, elected officials should demand clear evidence of demand projections from utilities and ensure the risk of getting it wrong falls on investors, not the American people.