Do data centers raise your electricity bill? Yes, and often before they exist

Residential electricity customers in the regions with the heaviest data center construction are already paying more for it, in amounts that grid operators and market monitors now publish. PJM Interconnection, the wholesale market operator serving 67 million people across 13 states and Washington DC, cleared its capacity auction for the 2028/2029 delivery year on July 14 at the price cap of 325 USD per megawatt-day, against 28.92 USD four delivery years earlier. Monitoring Analytics, PJM's independent market monitor, attributes 6.3 billion USD of that auction's 16.4 billion USD in charges to data centers, along with 29.4 billion USD of the 63.6 billion USD charged across the last four auctions. NRDC projects roughly 70 USD per month in added costs for the average PJM household by 2028 from capacity charges alone. So yes, data centers raise household electricity bills, and in the mid-Atlantic they are the largest driver of recent capacity cost increases. How much they raise yours depends on state cost allocation decisions, and the Edison Electric Institute counted 24 states with at least one approved large-load tariff as of July 2026, plus six pending.

Most public arguments about data centers and electricity bills tend to mix together three separate cost channels, each of which moves on its own schedule and answers to a different decision-maker:

1. Capacity costs, which are payments to power plant owners for being available at peak demand, set through auctions in regions like PJM and passed through to retail bills.

2. Rate base costs, which are a utility's capital spending on poles, wires, substations, and power plants, recovered from customers with a regulated profit margin over decades.

3. Wholesale energy costs, which are the price of the electricity itself, set hour by hour and rising wherever supply tightens against new demand.

Where the increases show up first: capacity auctions

PJM's auction record over the last four delivery years is the cleanest public data set on the first channel, because the market monitor publishes attribution estimates. Clearing prices moved from 28.92 USD per megawatt-day for 2024/2025 to 269.92 USD for 2025/2026, then ran into consecutive price caps at 329.17 and 333.44 USD, and now 325 USD, while the last two auctions cleared short of PJM's reliability requirement (by 6,831 MW this month), a first in the market's history. We ran the auction totals through a simple household translation, dividing each year's total by PJM's footprint-wide annual energy use and multiplying by 850 kWh of monthly consumption. The result comes out to roughly 2.30 USD per month for 2024/2025 against roughly 2.30 USD per month for 2024/2025 against 17.10 to 17.40 USD per month for the last three delivery years, with the 2027/2028 price collar alone holding off roughly another 10.50 USD per month. NRDC's 70 USD projection is an uncollared scenario built before the collar was extended: it assumes the temporary cap expires in 2028 and the annual capacity bill rises to 27 to 30 billion USD, which NRDC then divides across the region's households. The calculation below uses each household's own metered share at the collared prices that have held so far.

Figure 1. PJM Base Residual Auction totals by delivery year, converted to an estimated monthly capacity cost for an 850 kWh household. Amber segments show Monitoring Analytics' data center attribution where published; the hatched extension shows the 9.9 billion USD the price collar avoided in 2027/2028. Analysis: Gasilov Group, from PJM, Monitoring Analytics, and EIA data.

Capacity prices respond to forecasted load, and data center interconnection requests enter utility forecasts years before a single server draws power. In turn, what this means is that customers are paying today for facilities that do not exist yet, and Monitoring Analytics estimated that about 6.2 billion USD of the 2027/2028 auction's costs related to data centers that had not been built. Developers file interconnection requests in several markets and build in one... the load forecasts, meanwhile, tend to count each request as real demand.

A household in the PJM footprint can pay elevated capacity charges for three consecutive delivery years to hold grid space for data centers that are later cancelled or built elsewhere, and NRDC notes that PJM residents stay on the hook for those charges even if the data centers are never built.

The slower channel: rate base and rate cases

Electric and gas utilities across the country requested nearly 31 billion USD in rate increases during 2025, more than double the 15 billion USD requested in 2024, and filed another 18.6 billion USD in requests in the first half of 2026. Data center growth is one driver among several here (incl. storm hardening, wildfire mitigation, equipment replacement, and fuel costs), so precise attribution outside the capacity markets is genuinely hard, but the recovery mechanics matter more than the headline totals. A utility that builds a substation or a transmission line places the cost into its rate base, earns a regulated return on it for decades, and spreads recovery across customer classes according to allocation formulas set in rate cases. Regulators rarely reject these filings outright: of 83 rate requests tracked in 2025, two were rejected outright, with about half still pending at the start of this year.

NV Energy's Greenlink transmission project in Nevada shows the timing risk inside this channel more clearly than any other current example. The project grew from a 2.5 billion USD estimate in 2021 to 4.2 billion USD by federal approval, and in September 2025 state regulators approved charging Southern Nevada households roughly 4 USD per month for construction still in progress, years before the line delivers power.

As I told ConsumerAffairs in March, roughly 80% of that line's capacity is committed to data center operators, and whether those operators pay their fair share of the buildout they drive is a question commissions are just beginning to work through. I would push that a step further here: paying during construction means ratepayers carry the financing risk on top of the cost, because a cancelled or delayed anchor customer leaves the asset in rate base either way. Greenlink West, under construction since December 2024, is now projected to come online in mid-to-late 2027, with recovery from customers already underway.

The counterweight: 24 states writing large-load tariffs

State utility commissions are the venue where these costs get split between large customers and everyone else, and 2025 through 2026 has produced most of the large-load tariffs now on the books. Oregon's Public Utility Commission approved Portland General Electric's Schedule 96 in May 2026, a dedicated rate class under the state's POWER Act that requires data centers above 20 MW to carry the specific costs of serving them, keeps charges in place if a customer abandons infrastructure built for it, and adds a 1 cent per kWh surcharge above 100 MW that funds programs offsetting residential costs, incl. low-income energy programs. Virginia's GS-5 class for loads of 25 MW and above takes effect on January 1, 2027, with 14-year minimum contracts, minimum demand charges of 85% of contracted transmission and 60% of generation, and collateral of 1.5 million USD per MW.

The design logic is consistent across states: minimum demand charges and collateral convert a speculative interconnection request into a financial commitment, which prices the forecast problem from the capacity market at its source. Virginia's legislature added a measure this spring, signed in amended form, directing the State Corporation Commission to keep residential customers from carrying the generation and distribution costs of serving data centers; the SCC estimated the original cost shift at roughly 5.52 USD per month in residential savings.

Gasilov Group's energy regulatory advisory practice spends much of its time inside exactly these dockets, because two facilities with identical loads can face materially different cost structures one state line apart.

Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI signed the Ratepayer Protection Pledge at the White House on March 4, 2026, committing to "build, bring, or buy" the energy their data centers need and to pay its full cost. The pledge is non-binding, carries no compliance or penalty mechanism, and does not change how retail rates are set, because state commissions hold that authority. A second, expanded pledge event adding utilities and colocation operators is reportedly in preparation. I would say that for anyone pricing cost allocation risk, the binding documents remain tariff sheets and rate case orders, and a signed pledge does not appear in a revenue requirement, the formal total a commission allows a utility to collect.

What to check now

A company with facilities or contracts in these regions can turn this into four concrete checks: whether the service territory has an approved or pending large-load tariff (the EEI list linked above names each state), what the contract terms are (minimum demand percentages, collateral per MW, termination provisions, and minimum contract lengths, e.g. 12 years under AEP Ohio's tariff and 14 under Dominion's), when capacity costs pass through on the current supply contract, and which rate cases or generic dockets sit open right now. Households hold fewer levers: a fixed-rate supply contract in retail-choice states locks in the capacity pass-through for its term, and consumer advocates handle rate case intervention on ratepayers' behalf. Average US residential rates rose 7.3% year over year to 18.8 cents per kWh as of April, so the baseline keeps moving while the allocation questions sit in dockets.

FERC gave six grid operators, incl. PJM, 60 days from June 18 to justify or reform their large-load interconnection rules, a window that closes around mid-August. PJM plans to ask FERC to approve a special Backstop Procurement in September to address the 6,831 MW shortfall, its next base auction (for the 2029/2030 delivery year) is scheduled for December, and Virginia's GS-5 tariff takes effect on January 1, 2027.

If you are not sure where your exposure sits across these three channels, the Energy Exposure Diagnostic, a two-week screen, is the entry point. If you already know what you need, get in touch and we can scope it.

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Arif Gasilov is partner for Natural Resources & Built Environment at Gasilov Group, where he works on energy regulatory analysis, water governance, utility rate cases, and the resource footprint of large development. Meet Our Partners →

Frequently Asked Questions (FAQ):

How much of my electricity bill increase comes from data centers? In PJM territory, the market monitor attributes 29.4 billion USD of the last four capacity auctions' 63.6 billion USD in charges to data centers, which flows into the capacity portion of supply costs. Outside capacity market regions, attribution is harder because infrastructure spending is blended into rate base alongside storm hardening and equipment replacement.

Do data centers pay lower electricity rates than households? Per kilowatt-hour, large industrial customers generally pay less than residential customers because they take power at higher voltage with flatter usage. The new large-load tariffs change that comparison by adding minimum demand charges, collateral, and full responsibility for interconnection upgrades.