Left unchecked, early November 2025 will go down as the Rubicon when datacenters became the scapegoats for higher electricity costs. The messaging campaign has been aggressively launched and is gaining traction.
The reality, however, is fundamentally different.
Electricity prices were already on an upward tear before President Trump took office and implemented policies to accelerate the growth of datacenters. In fact, the widespread expansion of datacenters over the next decade can catalyze the substantial reduction of electricity costs while also improving grid reliability, thereby lessening service outages.
According to the Federal Reserve, nationwide electricity prices rose 31.6% from January 2021 to January 2025, compared with underlying inflation of 21.4% in the Consumer Price Index (CPI). Thus, electricity prices rose 48% more than other goods and services.
From January to September 2025, the latest period for which figures are available, the Federal Reserve reports a 5.0% increase in electricity prices, also above the CPI. While high, it is hardly a new trend. That has not stopped some from looking to pin the blame on datacenters.
In an October 21 interview with The Wall Street Journal, Jonathan Kanter, the former Assistant Attorney General for Antitrust Enforcement in the U.S. Department of Justice during the Biden Administration, warned, “Energy power is going to be an extremely important area of focus for antitrust enforcers” because “datacenters consumer power at the expense of local communities and businesses.”
On Monday, November 10, five U.S. Senators wrote to U.S. Secretary of Commerce Howard Lutnick and White House Office of Science and Technology Policy Director Michael Kratsios. The Senators bluntly attacked datacenters for electricity costs saying, “American families face soaring electricity bills caused by the Trump Administration’s sweetheart deals with Big Tech companies.”
The charge does not hold muster, based on several factors.
First, datacenters take years to build. And while more than a thousand additional datacenters will be needed to help Americans thrive with AI, there simply has not been enough time in the Trump Administration to bring new ones online, or to cause changes in power markets and prices.
The primary issues affecting most electricity consumers in 2025 are as follows.
Much of your electric bill is not for electricity. A typical electric bill involves costs for fuel (e.g., the natural gas used), transmission (the process of delivering electricity from power plants to your home), and an assortment of government taxes and fees. The latter can be 25% of a typical bill and include sales taxes, subsidies for renewable energy, and other opaque purposes. Cutting these electricity taxes is an immediate and direct way for politicians to lower electric costs.
Much of the transmission grid is old – and it is expensive to replace it. According to the U.S. Department of Energy, more than 70% of the electric grid is more than 25 years old. For decades, improvements have been put off, and the costs have risen substantially today to improve the grid.
Much more power generation is needed. With more fuel or power produced, the supply will increase and prices will fall. However, many areas, especially in the Northeast, have shut down large coal and nuclear plants while energy demand grows. In many areas, this is a significant structural issue that must be addressed.
Datacenters, in addition to the vast number of jobs and economic activity they bring to a region, can also be both the catalyst and central force in improving the delivery of electricity. They also help communities harvest the vast benefits of AI better.
As large users of electricity that will operate 24/7 for years in a community, datacenters often look to enter into multi-year power purchase agreements with utilities. This provides a stable, long-term source of investment capital that can and should facilitate the new generation coming online and the improvement of the transmission grid. Public utility commissions will assess such agreements to make sure they benefit the public, and it is local leaders who are directly accountable.
Datacenters also have the option of developing their own power sources. Communities that push datacenters towards that risk losing out on massive investments that will improve their electric grid, and defray costs to households.
Just as communities can decide whether they want datacenters, so too can the companies investing in datacenters determine where they want to locate. Many cities and states are courting companies investing in datacenters. Those who demagogue datacenters for electricity costs should take that to heart, as they could push these engines of prosperity out of their state to neighboring ones.
This article was originally published by RealClearEnergy and made available via RealClearWire.
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Data centers are just noting the Emperor’s New Clothes of wind and solar are delusional, and it is very rude to point that out.
“…and it is very rude to point that out.
Include an SMR when building a data center.
A suggestion if the U.S. rebuilds their grid: at the local level in cities it would be a better long term solution to bury the power lines in underground channels. They would be much less vulnerable to bad weather conditions, need less frequent repair and might come out cheaper in the long run. The esthetics are also not negligible, instead of having visible horrible looking power lines and cables ruin the scenery.
Underground transmission lines tend to have higher losses than overhead lines. Repairs may be less frequent, but tend to be much more expensive to repair.
Most folks don’t have a clue about electricity and the lines that guide the waves. That’s why the idea of burying cables gets so little pushback.
There are pros and cons re. ‘undergrounding’ the local distribution system. Burying lines for esthetic purposes is fine, but keep in mind that the higher cost of doing so will be reflected in rates.
“Come out cheaper in the long run. ” as long as you can accept ten times or more higher cost.
Repairs can be an absolute nightmare. Taking months instead of hours.
” Datacenters, in addition to the vast number of jobs and economic activity they bring to a region, can also be both the catalyst and central force in improving the delivery of electricity. They also help communities harvest the vast benefits of AI better.”
Yeah right. Back it up if you can. Otherwise, this is simply your speculation.
Where I agree with you is that local citizens have the right to oppose AI data farms. However, small-town governments may force it through anyway, despite local objections in order to increase property tax revenue.
My September electricity bill was ~$47 for electricity and ~$30 delivery charges.
That sounds a little high for the electricity relative to delivery. Maybe some transmission is counted in the electricity.
See my comment below about rates in Connecticut. Thirty percent for electricity, 30% to subsidize poor households, and the remainder for transmission and distribution. The overall charge is $0.37/kwh.
It matters where new generation is sited. Grid frequency is universal but voltage is very local. Without sufficient rotating inertia that is properly distributed local pockets of the grid can be at higher risk of brownout.
As to cost, if large power users – datacenter or otherwise are properly tarrifed, I.e. the government doesn’t go subsidy crazy the projects will lead to a more stable grid overall and would not have a negative impact on non-bulk users.
Ah, the ‘bright future’ idea. Where have heared that before?
Immediate examples come to mind: 1) Wind/solar/batteries are reliable & cheaper [see Spain, California & Texas], and 2) Socialism/communism.[any of the 50+ attempts over the past 120 years].
Its a common tactic to dismiss failures as “They just didn’t implement it correctly.”
We are dealing with people who don’t stand for anything. They are against free market capitalism, individual liberty and limited government. If you support any of these they are against you. They were for the whales before they were against them, they were for forests before they were against them, they were for birds of prey before they were against them. What they say or think means nothing to me, no matter what we say or think they will likely be against it. If they ever look like they are supporting what we support don’t get too excited they are fickle and will move on shortly. I don’t care what they say or think.
You just wrote a synopsis of 1984.
Data Centers should be required to provide their own electricity. They have the money.
I don’t want to subsidize Data Centers by paying higher electric bills.
The Data Centers should get creative, and not make enemies of the American people by forcing higher electricity prices on them.
Trump has said Data Centers should provide their own electricity. Congress should make that a requirement of the law.
“They have the money.”
If they didn’t have the money, should we provide electricity for free?
Bill Gates eg has the money to build his own water system. Should he?
Whether they have the money seems like the wrong argument because their having-of-money isn’t the point… unless we’re going communist.
Some town somewhere will agree to subsidize data center electricity in exchange for the economic benefit of having a data center built in their town. I hope it’s not _me_ paying, but if the data center should happen to be one or two towns over… I’ll commute.
Your Bill Gates water system misses the mark.
Unless his project would drain a town of its water supply, then there is relevance.
I very much doubt AI data centers will offer their services free of charge.
No need to give them electricity for free.
Let the AI data center customers pay for it in the fee to use.
That is supply and demand, not socialism.
\
How a town elects to participate in an AI data center development is up to the town and it is a political and economic decision. However the people affected by such decisions both positive and negative should have a voice. Democracy includes, necessarily, debate.
Trump said again today at a U.S./Saudi business conference that AI companies should supply their own electricity.
Using that logic, every factory, office building and grocery store should also provide it’s own power.
Heck, everything that uses electricity should be required to provide their own power.
Wrong. Data/ computer centres are a whole different category than all the other users in terms of usage. And new ones add to the existing use of electricity. Since a lot of grids are already strained the outcome will be negative. We don’t have an unlimited supply if electricity.
It’s like building a whole city next to an existing one and share the amount of electricity that is coming in. Electricity still needs to be generated somewhere..
“Wrong. Data/ computer centres are a whole different category than all the other users in terms of usage.”
That’s right.
And at least some of the AI companies are agreeable to building their own generating plants. They should all be doing it. They don’t necessarily have to build their own generating plant, they could feed off the local utility as long as they agree to pay all the costs for the local facility to upgrade its infrastructure.
If the local facility has to pay for the upgrades, they will pass these costs on to their customers. We don’t want that.
Agreed..but first you need to have access to the energy in the first place which needs to be generated. So the plan should be: IF you want data centres coming to the area make a normal cost/ benefit analysis, viability study and consult ( ASK) the local population what they think and take that seriously into consideration.
You know: the right kind of democratic process..
Not a different category, but rather different orders of magnitude in impact.
If a new auto plant were proposed and the juice needed to run it would seriously impact the local grid, it would be the same discussion.
Mark, not really.
A power company is in business to make a profit. Spending a vast amount of money merely to satisfy one customer with no real assets is foolish, in my worthless opinion.
Would you go into debt up to your eyeballs to invest in an AI company?
If you wouldn’t, why should the shareholders of a power company?
every factory, office building and grocery store should also provide it’s own power.
Not existing ones, but it’s fairly common in city planning to require new developments to also build the infrastructure to support them. I think this would fall under that – it’s a new development that needs infrastructure beyond the existing, so it needs to also build its supporting infrastructure.
A girl-power science podcast I enjoy, ironically sponsored by some AI companies, just ran an episode about how AI conflicts with alternative energy. It was so sad to listen to ostensibly science-driven presenters working so hard to avoid obvious questions.
The podcast lands squarely on a landmine that post cold war flower children buried in their own field – they’ve elevated STEM eduction to religion for 20 years and now have to deal with young adults who did better than them on the math section of the SATs. Despite years of painstaking indoctrination some keep asking things like “whats so bad about my town getting a little warmer?” and “how many solar panels would it take to make my car go 65?”
HOW THE CLUB OF ROME AND THE WEF INVENTED CLIMATE CHANGE IN ORDER TO ATTACK HUMANITY – 1:45
Please watch and share with those you love. Andrew Bridgen
https://t.me/ABridgen/1678
The Population Bomb should be part of that.
This article states that part of an electric bill is for fuel–what fuel? Fuel burned to generate electricity? If so, it’s a valid charge for fuel. I have heard of fuel surcharges, approved by the rate setting agency and imposed when the fuel component in the rate base does not adequately cover the actual cost of a fuel for which the price is volatile. But let’s not pretend that there is some other charge for fuel.
A huge charge missing from this assessment is the extra charge to subsidize poor ratepayers. In Connecticut, this charge is 30% of the bill, with electricity being 30% also and transmission and distribution the remainder, roughly speaking.
Ah, the so-called ‘Public Benefits’ charge. This not only covers poor folks, but also a lot of the subsidies that go to renewables and the payment that keeps CT’s Waterford nuke on line because its formerly favorable economics were impaired by renewable subsidies. Another impact on your bill is that CT energy providers have to purchase RECs covering at least 38% of their load from the Al Gores of the world.
The “fuel surcharge” rule was implemented years ago because the regulatory process is too slow relative to the volatility of the price of fuel. That volatility cuts both ways; sometimes it favors the customer, sometimes the utility. It is such a major cost of operation that it threatens the foundations of the “public necessity” basis of a regulated monopoly. When the fuel charge rule was implemented the price of fuel was hugely unstable. The solution was to pass the fuel costs directly to the consumer. Fuel cost is part of the rate case when the utility petitions the Public Service Commission for rate relief when the base line cost is established.
The rule applies not just to electricity; it also applies to your natural gas supplier. The utility has a public obligation to find the lowest cost source for the consumer. It is no different than you hunting down the cheapest local gas station to fill up your auto.
Natural gas is now the dominate fuel for new electricity production (at least in the US) because it happens to be the lowest cost way of generating reliable electricity.
Ok, can we agree that the companies who want the new ‘data’ centres pay for both the new infrastructure and existing grid?
If the answer is NO than F them..
Energy is a finite source. BYO could be a minimum requirement but if it comes at the expense of ordinary citizens no amount of fair weather AI BS can stop the S load of resistance.
It is almost on par w the golden future renewables promised everybody. It certainly sounds similar..
Repeat after me: ‘ no…free…lunch’!
Personally, I don’t see the vast benefits of AI–in fact, I don;t see any benefit at all. Of course, being an old man and a Luddite to boot might have something to do with that.
How long has it been since you visited a library to find the answer to a simple question? Example: What state produces the most blueberries?
John, the question can be made more complicated by distinguishing between cultivated blueberries and wild blueberries. Washington produces the most cultivated blueberries, but Maine produces the most wild blueberries. Or so says Google AI.
Blueberries aren’t the only blue commodities harvested in our blue state. Socialist/communist Katie Wilson won this month’s close Seattle mayoral race after several thousand Wilson ballots suddenly appeared after midnight of election day to put her over the top.
That’s a good question for you to ask an AI: “What are the possible benefits of AI?
After getting answers, then ask it for the downsides of AI. You might find it interesting.
If using Windows 11 click on the free Copilot icon on the task bar [looks kinda like a colorful Mobius strip]. The Google Gemini AI app is also free: get it from the Play Store for Android phones.
I must admit to some ignorance. What are the “datacenters” being referred to?
Are these the ones connected with so-called Artificial Intelligence? If so, they seem to be a complete waste of money if all Artificial Intelligence is as worthless as Google’s –
“AI responses may include mistakes.”
If companies want to power datacenters, or Bitcoin mining, or graphics rendering centers, let them create their own power supplies. Not much point in taxpayers funding reliable large energy sources for private companies who might collapse, leaving the taxpayers with an expensive albatross around their neck, so to speak.
If companies can’t afford to power their enterprise, it looks like a scam to me. What’s next? The taxpayers should build offices for “technology companies”? Buy motor vehicles, private jets, lend billions to buy specialised computer equipment – all to provide a loss-making service which “may include mistakes”?
Whatever happened to “capitalism”? You know, competition free from overt or covert Government subsidies? Obviously too hard.
One of the issues might be that the new ‘data’ centres will insist on unlimited and steady energy supply ie NOT renewables.
Then the rest of the population would be relying on renewables and restrictions to ‘safeguard’ the system.
We can’t or should have those binary systems in place.
Everything should be taken into consideration. But corruption, including local politicians can and will be bought off to allow leeching. Same old story, railroads, oil, robber barons..Don’t let the tech mafia become the old robber barons. It surely feels that way atm..
“AI responses may include mistakes.”
At least they tell you up front, unlike google. But even then, people don’t pay attention to the warning.
Data Centers? We don’t need no Data Centers.
/humor