Power bills and data centers cast rare spotlight on utilities in US midterms

In the 2022 US midterm elections, electricity prices have emerged as a significant political issue, as Americans grapple with rapidly rising utility bills. Data from the Energy Information Administration reveals that home electricity prices have surged more than 10% since President Donald Trump's election in 2024, outrunning the cost increases of other goods and services.

This trend has particularly affected political battleground states like Ohio, Michigan, and Pennsylvania, which are also key locations for new data centers. Some electricity bills have even risen by triple the inflation rate.

Politicians seeking to fill statehouse seats have capitalized on this issue, with many backing proposals to curb utility rate hikes and reduce guaranteed returns. These measures could have far-reaching implications for the country's utility industry. Charles Hua, executive director of PowerLines, a nonprofit advocating for consumer-friendly utility policy, noted that this could be the first election where utilities and electricity are prominently featured as issues in the midterms.

Utilities are subject to stringent regulation, with state regulators typically approving expenditure on the grid and the recovery of costs through rate increases. Moreover, regulators determine the return on equity utilities can earn on their grid investments. This year, utilities are projected to request record-high $31 billion in rate increases, more than double the previous record. Investor-owned companies are also expected to invest nearly $1.3 trillion over the next five years.

In response to the rising electricity costs, several gubernatorial candidates have pledged to lower energy bills if elected. For instance, Ohio's Democratic gubernatorial candidate, Amy Acton, aims to appoint a public utilities commission unaligned with utility companies and work with the state attorney general to curb excessive rate hikes and predatory practices.

Acton has also expressed support for a data center moratorium. Her Republican opponent, Vivek Ramaswamy, has promised not to allow Ohioans living near data centers to bear the burden of electricity bills.

Some governors using their political influence to urge utilities to keep prices down. In April, Pennsylvania Governor Josh Shapiro successfully lobbied utility PECO Energy Company to withdraw its proposal for a rate increase, which could reduce future utility bills by up to $34 a month. Shapiro has since been writing to utility CEOs urging changes in how utilities justify spending and returns on equity.

However, reducing guaranteed returns and freezing rates may not significantly impact household bills and could potentially lead to a long-term reduction in investments in the grid. The nation's electrical grid is a critical infrastructure, and it does not function in line with the political calendar. Drew Maloney, president of Edison Electric Institute, a trade organization representing investor-owned electric utilities, emphasized the need for consistent investment in the grid to maintain reliable energy delivery to customers.