Electricity bills have become a campaign issue in 2026, and data centers, the warehouse-sized buildings full of servers that run cloud services and artificial intelligence, are at the center of the argument. Local ballots in eight states include at least 39 measures on data centers this year, more than half of them in Ohio. In Congress, a bill meant to make large power users pay for their own grid upgrades passed the House 417 to 3 and then stalled in the Senate.
The politics are loud. The mechanics are less well understood. This article explains how much electricity data centers use, how their costs can reach a household bill, and what the policy options would do.
How much power data centers use
A report for the U.S. Department of Energy by Lawrence Berkeley National Laboratory found that data centers used about 176 terawatt-hours of electricity in 2023, roughly 4.4% of all U.S. electricity, up from 58 terawatt-hours in 2014. It projected that share could reach between 6.7% and 12% by 2028, depending mainly on how fast AI computing grows. The International Energy Agency estimates that a typical AI-focused data center uses as much electricity as 100,000 households, and the largest ones under construction will use many times more.
The growth is concentrated. Northern Virginia, central Ohio, Texas, Georgia and parts of the Midwest have attracted huge clusters, because of land, tax incentives, fiber networks and access to transmission lines.
Bills are rising, for several reasons
The U.S. Energy Information Administration estimates that the average residential electricity price was 17.3 cents per kilowatt-hour in 2025 and will average 18.2 cents in 2026, an increase of about 5%, faster than overall inflation. It forecasts a smaller rise, to 18.7 cents, in 2027.
Data centers are one cause, not the only one. Utilities are also spending heavily to replace aging poles, wires and substations, harden the grid against storms and wildfires, and meet demand from new factories. Natural gas prices, which set the price of much of the country’s electricity, have risen. Increases have been steepest in California, where wildfire costs dominate, and in New England, where gas pipelines are constrained. That is worth keeping in mind when a candidate blames any single cause.
How a data center can raise your bill before it opens
Your bill pays for three main things: the power itself, the high-voltage transmission lines that move it across a region, and the local distribution network that delivers it to your home. Data centers can affect all three.
- Capacity markets. In much of the eastern U.S., a regional grid operator called PJM, which covers 13 states and D.C., runs an auction to pay power plants to be available years in advance. Because PJM forecast a surge in demand, largely from data centers, the last two auctions cleared at the maximum allowed price. For the year starting June 2027, the price was $333.44 per megawatt-day, and the auction still came up about 6,600 megawatts short of its reliability target. PJM said nearly all of the forecast growth came from data centers. Those costs are spread across all customers in the region, including households, whether or not a data center is nearby.
- Transmission and distribution. Connecting a large data center can require new substations and lines. If those costs are folded into the general rate base, every customer pays a share.
- Stranded-cost risk. If a utility builds for a data center that is delayed, downsized or never built, the remaining customers can be left paying for the investment.
Who is supposed to pay: “large-load” tariffs
State utility regulators decide how costs are divided among customers, and many are now writing special rules for very large users. Two examples:
- Ohio. In July 2025, the Public Utilities Commission of Ohio approved a tariff for AEP Ohio that requires new data centers using more than 25 megawatts to pay for at least 85% of the capacity they sign up for, even if they use less, for up to 12 years. The aim is to make sure the company that triggered an upgrade pays for it.
- Virginia. In late 2025, Virginia’s State Corporation Commission created a new rate class for Dominion Energy customers using 25 megawatts or more, starting January 1, 2027. Those customers must sign 14-year contracts, pay minimum charges covering at least 85% of transmission and distribution costs and 60% of generation costs, post collateral, and pay exit fees if they leave early. The same decision raised the typical residential bill by about $16 a month, for reasons that included, but were not limited to, data center growth. Critics argued the contracts should be longer, because grid equipment lasts decades.
The federal bill that passed the House would have required state regulators to consider adopting such a standard, without requiring it. Senate Democrats called it too weak and favored a competing proposal that would have the Federal Energy Regulatory Commission require large customers to pay for the upgrades they need. The bill got 57 votes in the Senate, short of the 60 needed to advance.
What the local ballot measures would do
Most of the 39 local measures are about whether and where data centers can be built, not about electricity rates. In Ohio, examples include:
- Bans on some or all data centers in about a dozen communities, often above a size threshold such as 25 megawatts.
- Zoning rules for unincorporated townships.
- Voter approval requirements. One city’s measure would require a public vote for projects on 50 or more acres, using more than 20 megawatts at peak, or more than 500,000 gallons of water a day.
- Financial guarantees from developers seeking tax incentives.
- Referendums on specific rezonings and development agreements.
Measures like these can address noise, water use, land use and tax deals. They have limited power over electricity prices, which are set by state regulators and, in places like PJM, by regional markets. A data center blocked in one town may be built in the next county and still affect the same regional grid.
The trade-offs
Data centers bring construction jobs, a modest number of permanent jobs, and large property tax payments that can fund schools. They also bring heavy power and water demand, and tax incentives that some studies find cost more than they return. The fairest answer to the bill question depends mostly on rules few voters see: how utility regulators assign the cost of new plants and wires, and how long large customers are locked in to pay for them.
How to read your own bill
- Look at the line items. Bills usually separate supply, transmission and distribution charges, plus riders for specific programs.
- Find your utility’s rate case. Rate increases are approved in public proceedings by your state utility commission, which takes public comments.
- Ask who pays for new load. Whether your state has a large-load tariff, and what it requires, is the most direct answer to whether you are subsidizing a data center.
For more on AI’s economic effects, see what the evidence says about AI and jobs, and for how price increases show up in the official numbers, see how inflation is measured.