Rising power costs draw bipartisan pressure on who should pay for AI data centers
As electricity prices rise, the political pressure mounting around data centers—especially those backing artificial intelligence—has converged on a central question: who should cover the cost of the power that these facilities need. Politicians from President Donald Trump to local and state lawmakers have found rare overlap in insisting that technology companies, not regular households, should foot more of the bill for the electricity requirements tied to AI.
But that alignment has not resolved the details of how the “fair share” idea should work in practice. Harvard’s Ari Peskoe, who directs the Electricity Law Initiative at Harvard University, described the term as difficult to pin down, saying “‘fair share’ is a pretty squishy term,” and adding that the industry uses the word because “‘fair’ can mean different things to different people.”
The debate has become closely tied to the broader cost-of-living politics playing out ahead of the midterm elections, with voters likely to weigh how government responds to electricity-rate pressure and the role of large data centers. Christopher Borick, a pollster and director of the Muhlenberg College Institute of Public Opinion, said, “Voters are already connecting the experience of these facilities with their electricity costs and they’re going to increasingly want to know how government is going to navigate that.”
The issue has also shifted momentum compared with last year’s approach, when states competed to attract major data center projects and Trump directed his administration to do what it could to secure electricity for them. Now, that push has met backlash, with towns fighting some projects and with some utilities seeing bills rise quickly—sparking anger that has shown up at the ballot box, including Democrats ousting two Republicans from Georgia’s utility regulatory commission in November.
How AI demand reshapes electricity costs for more than just the data center
Data centers are expanding across the U.S. as tech companies seek to meet worldwide demand for chatbots and other generative AI products that require large amounts of computing power to train and operate. The facilities, which can resemble large warehouses, often need enough power to exceed what any utility has supplied to a single customer in the past, which can trigger competition to build more power plants.
Because electricity demand from data centers can spread outward, some analysts say the effects can reach broader ratepayers. The AP report noted that if utilities build additional power plants or transmission lines to serve the growing load, utilities can spread those costs across ratepayers rather than confining the expense to the data centers alone—an outcome consumer advocates say helps explain why the policy fight is now blending into everyday affordability concerns.
Regulatory approaches: long-term contracts, new infrastructure costs, and down payments
Some states and utilities have started to develop ways to shift data-center energy costs to tech companies. The report said regulators have required companies to buy electricity in long-term contracts, cover the power plants and transmission upgrades the demand requires, and provide large down payments to account for situations where a customer could fail to continue or reduce demand later.
Even so, analysts say these kinds of rules may not solve the most immediate challenge. The report cited the idea that if electricity demand is rising faster than the pace of power plant construction, short-term shortages and the timing of new infrastructure can still create rate pressure that is difficult to prevent—raising a question about how to handle periods when new capacity is not yet available.
Abe Silverman, a former utility regulatory lawyer and an energy researcher at Johns Hopkins University, said in the report, “What do you do when Big Tech, because of the very profitable nature of these data centers, can simply outbid grandma for power in the short run?” He added that this is “going to be the real challenge.”
Consumer advocates argue “fair share” should include more than electricity rates
Consumer advocates say the “fair share” concept should also cover not only the electricity consumed but the associated grid upgrades and other costs that are driven by data-center demand. The report described disputes in multiple states, including Oregon, where a law aimed at protecting smaller ratepayers from data-center power costs has led to a standoff between a consumer advocacy group and Portland General Electric over how to implement the approach.
The AP report also described warnings from consumer advocates in other states—including Indiana, Georgia and Missouri—that utility spending on data-center-related buildouts could end up being pushed onto regular ratepayers if regulators do not structure rules to prevent that outcome.
Lawmakers and governors move toward fees, moratoriums, and limits on rate impacts
At the federal level and in statehouses, the report said legislation is pouring in to regulate data centers. It described congressional bills by Democrats as awaiting Republican cosponsors, while lawmakers in multiple states are exploring moratoriums on new data centers, drafting rules meant to protect ratepayers, and targeting tax breaks and utility profits tied to the data-center boom.
Governors—some of whom previously worked to recruit data centers—are increasingly talking tough. Arizona Gov. Katie Hobbs, running for reelection this year, proposed a penny-a-gallon water fee on data centers and sought to eliminate a sales tax exemption that most states offer data centers, calling it a $38 million “corporate handout.” In her state-of-the-state address, the report said she told residents, “It’s time we make the booming data center industry work for the people of our state, rather than the other way around.”
Federal dispute: Wright says data centers aren’t the cause, Democrats cite rate protections
In Washington, the report described an ongoing struggle over blame for rising energy costs. Republicans have pointed to liberal state energy policies and have suggested those rules favor renewable energy in ways that increase transmission costs and disrupt supply by blocking fossil fuels.
Energy Secretary Chris Wright disputed the central narrative that data centers are driving higher electricity prices. The report said Wright told a news conference earlier this month: “Americans are not paying higher prices because of data centers. There’s a perception there, and I get the perception, but it’s not actually true.”
The dispute also surfaced during a four-hour U.S. House subcommittee hearing last week involving members of the Federal Energy Regulatory Commission. The report said Republicans encouraged FERC members to speed up natural gas pipeline construction, while Democrats urged FERC to limit utility profits and protect residential ratepayers from costs connected to data centers.
During that hearing, FERC chair Laura Swett told Rep. Greg Landsman, D-Ohio, that she believes data center operators are willing to cover their costs and understand that community support matters. The report said Landsman responded, “That’s not been our experience,” adding that projects in his district are getting tax breaks, sidestepping community opposition and costing people money. He concluded, “Ultimately, I think we have to get to a place where they pay everything.”