The AI revolution is likely to drive up your electricity bill. Here's why.

New Jersey residents may see their electricity bills increase by up to 20% starting June 1, according to the state's public utilities board. The rise in rates is partly attributed to the proliferation of data centers across the U.S., driven by the growing demand for artificial intelligence, data storage, and other technology services. A report from Schneider Electric projects that electricity demand will increase by 16% by 2029 due to the expansion of data centers.

Most data centers rely on the national electrical grid for energy, which means American ratepayers will ultimately bear the cost of the electricity increase. Mark Wolfe, executive director of the National Energy Assistance Directors Association, told CBS MoneyWatch that utilities are building new infrastructure and raising rates without full transparency or public input, leading to higher electricity bills for households while tech companies benefit from favorable deals.

Data centers are becoming increasingly large and energy-efficient, with the number of data centers nearly doubling between 2021 and 2024. The trend is toward bigger data centers, which consume even more electricity. Generative AI companies, responsible for training large language models like ChatGPT, are a significant factor behind the growing electricity demand.

Data centers require power for cooling systems to prevent overheating, adding to their energy consumption. Torsten Sløk, chief economist at asset management firm Apollo Global Management, estimates that data centers will need an additional 18 gigawatts of power capacity by 2030, compared to New York City's power demand of about 6 gigawatts.

While not all electricity demand related to data centers is due to AI, the sector contributes a portion of it. Data center electricity demand is expected to increase U.S. electricity prices in 2026, with utilities incorporating the high demand from data centers into their pricing models. Dominion Energy, one of Virginia's largest utilities, proposed an $8.51 monthly rate hike in 2026, including a new rate class for high-energy users like data centers.

Electricity prices have already risen by 4.5% in the past year, and analysts predict a further surge this summer. The potential Republican budget package, known as the "big beautiful bill," could increase energy expenditures for families by nearly $400 a year if passed. The spread and size of data centers are growing, straining the grid's capacity, and posing a threat to its reliability.