Electricity Outruns Inflation, and Data Centers Get the Blame

WASHINGTON, Oct. 19 — ForFor most American households, the build-out of artificial intelligence comes with one figure they can check every month: the electric bill. Whether the build-out is what is pushing it up is a harder question than the politics allows.

In September the consumer price index for electricity stood 4.4 percent above its level a year earlier, against 3.7 percent for all items, the Bureau of Labor Statistics reported on Oct. 14.The IndexThe bureau’s electricity index tracks prices paid by urban consumers across the country; the figures here are not seasonally adjusted. It has no figure for October 2025, lost to that year’s lapse in federal appropriations. In September, gasoline, up 34 percent over the year, lifted the all-items figure. Electricity’s rise over the year has exceeded the all-items rate in every month of 2026 so far. Since September 2020 its index has risen 41.9 percent, against 29.5 percent for all items.

That gap has become politics. Memphis’s City Council has a moratorium on data-center permits on its agenda for Tuesday, at third and final reading. Two Virginia state senators have prefiled a bill to freeze local siting approvals and state permits for data centers from July 1, 2027, to July 1, 2030. On Nov. 3, voters in at least three dozen cities, counties and townships will decide local data-center measures.The BallotsBallotpedia counted 38 such measures in 2026 as of Sept. 21, 34 of them on the Nov. 3 ballot. Stateline, citing Ballotpedia on Oct. 12, gave 39 in eight states, 21 of them in Ohio. In the four decided by Ballotpedia’s September count, voters favored greater restrictions each time.

It has also become money. In the third quarter, investor-owned utilities asked regulators for a record $4.5 billion of electric and gas rate increases, more than double the third quarter of 2025, according to PowerLines, an advocacy group.The RequestsPowerLines counts $23.1 billion of such requests so far in 2026. The largest in the quarter, from FirstEnergy’s Jersey Central Power & Light, includes recovery of $476 million in deferred storm costs. If regulators approve them, customers pay. The argument is over how much of the rise the data centers have caused, and how much of it they should bear.

The Bill

The record is less tidy than either side’s slogans. The average residential price of electricity slipped to 19.6 cents a kilowatt-hour in September from 20 cents a year earlier, by the estimates of Heatmap and MIT’s Electricity Price Hub, but the average residential bill rose to about $180 from $173. The hub estimates residential rates and bills; the bureau’s index tracks prices paid by urban consumers.

Both can be true, Heatmap explained. The decline, the first year-over-year drop in the average price since September 2023, came mostly because California moved its Climate Credit for ratepayers to August and September, from April and October. Excluding the credit, the MIT researchers found, average prices would have been roughly flat. Even with it, average bills rose over the year in 45 states and the District of Columbia; a bill also reflects how much power a household uses, which a price per kilowatt-hour does not.

In Ohio, home to 20 of the 38 measures Ballotpedia counted in September, the average price rose to just over 20 cents from 18 cents, and the average bill to about $162 a month from $129, Heatmap reported.

The Blame

Politicians have drawn their own conclusions. Constituents who compare their bills with a year earlier “are shocked at how much their electric bills have gone up,” Glen Sturtevant, a Republican state senator in Virginia who plans his own moratorium bill, said on Oct. 15, the Virginia Mercury reported. “One of the major driving factors is the proliferation of the data centers, and the costs of their power generation in transmission being subsidized by Virginia ratepayers in their electric bills,” he said.

The firmest attribution on the record concerns PJM Interconnection, which runs the grid for 13 states and the District of Columbia. PJM’s independent market monitor counts $29.4 billion of added capacity payments over the grid’s last four auctions from existing and forecast data-center load. Data-center load growth “is the primary reason for recent and expected capacity market conditions,” including high prices, the monitor, Monitoring Analytics, wrote in August. It puts most of the weight on forecast demand rather than demand already on the system: “Forecast data center load growth has been the primary cause to date and the accuracy of those forecasts is highly questionable,” it wrote.

Capacity costs raised average PJM wholesale costs by 0.9 cents a kilowatt-hour in 2025, and rising capacity prices were a significant contributor to retail price increases in many mid-Atlantic states, according to researchers at Lawrence Berkeley National Laboratory and the Brattle Group. They listed data-center load growth among several causes of those prices, alongside revisions to the market’s design. Most of PJM’s new demand comes from data centers and other large customers, David Souder, its executive director of system operations, wrote on Oct. 15.Called UponPJM pays some customers in advance to cut their use when the grid is stressed. It called on them on 15 days in 2025 and 2026, including Oct. 13 and 14, against eight days from 2015 through 2024.

Forecast data center load growth has been the primary cause to date and the accuracy of those forecasts is highly questionable.

The Berkeley study also holds the strongest counter-evidence. From 2019 to 2025, states with the fastest growth in electricity demand generally saw average retail prices fall in real terms, the Berkeley researchers found. Under prevailing rate structures, they wrote, more demand can spread fixed costs more thinly; the link was less clear for residential prices. The presence of significant data-center and cryptocurrency growth did not appear to alter their conclusions, they wrote. But “past need not be prelude,” they added, citing PJM, where rapid load growth met constraints on supply and delivery.

Other causes are documented too. The price of natural gas delivered to power plants rose 36 percent in 2025 from its all-time low the year before, the Berkeley study found, and was a driver of retail price changes in 21 states; it also found cost growth significantly driven by spending on transmission and distribution. In Maine, where prices reached just under 40 cents a kilowatt-hour in September from 31 cents a year earlier, the state’s public advocate has blamed natural-gas prices, distribution costs, especially storm repairs, and to a lesser extent renewable subsidies, Heatmap reported.

The price index itself counsels care. More than half of its six-year rise came in the two years to September 2022, when it climbed 21.6 percent. In the four years since, electricity has risen 16.7 percent, against 13.5 percent for all items.

The Ballot

Who pays is clearer than who caused it: customers, through rates that regulators approve. Dani Marx, a spokeswoman for the Edison Electric Institute, which represents investor-owned utilities, said in an email to Utility Dive that “every rate request gets rigorous review by state regulators,” and that utilities were investing to strengthen the grid and prepare “for increasingly severe weather.”

Generators may gain. Federal regulators’ rejection of most of PJM’s data-center rules could keep its capacity prices higher for longer, favoring independent power producers such as Constellation Energy, NRG Energy, Talen Energy and Vistra, Jefferies analysts said in an Oct. 12 client note. “While there is still uncertainty within PJM’s market construct/rules, the latest development is positive for existing generation/IPPs,” they wrote, as quoted by Utility Dive.

In the paper’s reading, the bill has become the place where the build-out’s costs are argued over, whatever their true share. Memphis’s council is scheduled to vote on Tuesday; on Thursday PJM consults its members on plans for a new filing on its Reliability Backstop Procurement, a purchase of capacity to fill a shortfall. On Nov. 3, Democrats could take control of Georgia’s utility regulator, the Public Service Commission, if both their candidates win, Heatmap reported.

The next reading of the electricity index comes on Nov. 10, a week after voters decide their local data-center measures.