AI and Data Centers to Boost U.S. Electricity Bills by 20% Starting June 1

The AI revolution is likely to drive up your electricity bill, and herein lies the explanation for why. On June 1, 2025, New Jersey residents received a jarring announcement from the state's public utilities board: electricity bills could surge by up to 20%. A primary contributor to this rate hike is the proliferation of data centers across the United States. These large-scale computing facilities, essential for AI, data storage, and cloud services, are expected to significantly increase electricity consumption in the coming years. According to a report from Schneider Electric, a leading company in digital automation and energy management, electricity demand will rise by 16% by 2029, driven largely by the expansion of data centers. These facilities primarily depend on the national electrical grid, placing the financial burden on consumers rather than the tech companies that benefit from them. Mark Wolfe, executive director of the National Energy Assistance Directors Association, emphasized this issue, stating, "As utilities race to meet skyrocketing demand from AI and cloud computing, they're building new infrastructure and raising rates, often without transparency or public input. This results in higher electricity bills for everyday households while tech companies enjoy favorable deals behind closed doors." The U.S. is witnessing a significant surge in the number and size of data centers. The Environment America report indicates that the number of data centers nearly doubled between 2021 and 2024, with the highest concentrations found in Virginia, California, and Texas. Dave Turk, former deputy secretary of the U.S. Department of Energy, noted that the trend is toward larger, more efficient data centers, but even these efficiencies are not enough to offset the overall increase in energy demand. Generative AI, such as ChatGPT, is a major driver of this energy consumption. According to the Electric Power Research Institute, AI searches consume 10 times more electricity than conventional internet searches. Torsten Sløk, chief economist at Apollo Global Management, predicts that data centers will require an additional 18 gigawatts of power capacity by 2030—roughly three times the peak power demand of New York City. In 2023, about 4.4% of U.S. electricity consumption was attributed to data centers, and a portion of this is linked to AI operations, according to a study by the Department of Energy's Lawrence Berkeley National Laboratory. While data centers are becoming more efficient, the sheer volume of AI-related activities continues to strain the grid. The impact is not limited to data centers alone. Other factors contributing to rising electricity prices include the price of natural gas, inflation, and the ongoing electrification of buildings and vehicles. For instance, Dominion Energy, a major utility in Virginia, proposed a price increase of $8.51 per month in 2026, citing the "new rate class for high energy users, including data centers" as one of the reasons. Recent data from the Labor Department shows that electricity prices have already risen by 4.5% in the past year, and analysts predict a further surge this summer. If the Republican-backed budget package known as the "big beautiful bill" is enacted, it could further exacerbate the problem by repealing tax credits established under the Inflation Reduction Act, potentially increasing a family's energy costs by nearly $400 annually, according to Rhodium Group analysts. Beyond financial implications, the rapid development of data centers poses a risk to the reliability of the electrical grid. The North American Electric Reliability Corp (NERC) reported that data centers and cryptocurrency facilities are expanding faster than the power plants and transmission lines needed to support them, leading to potential system instability. PJM, a grid operator covering 13 states and Washington, D.C., highlighted data center demand as a critical factor that could contribute to capacity shortages in its 2025 forecast. Industry insiders are deeply concerned about the sustainability and equity of this trend. They argue that while tech companies reap the benefits of advanced AI and cloud services, ordinary consumers bear the brunt of the increased operational costs. This raises questions about the need for better regulation and transparency in how utilities manage and allocate resources to support high-demand sectors like AI and cryptocurrency. Schneider Electric, a global specialist in energy management and automation, has called for more sustainable practices, including the adoption of renewable energy sources and improved energy efficiency measures in data centers. The company's focus on developing greener technologies aligns with broader efforts to mitigate the environmental impact of the tech industry. In summary, the rapid growth of AI and data centers is putting unprecedented pressure on the U.S. electrical grid, leading to higher electricity bills for consumers and potential reliability issues. Industry leaders and experts are advocating for more transparent and sustainable practices to address these challenges, ensuring that the benefits of technological advancements are not overshadowed by their environmental and economic costs.