Public backlash toward data centers is escalating. Activist groups gather to voice concerns, and in some cities, council members are being voted out of office for approving data center construction. Extreme resistance includes an Indianapolis councilman receiving 13 bullet holes through his front door and OpenAI CEO Sam Altman’s San Francisco home targeted with a Molotov cocktail and gunfire.
More data centers have been rejected or canceled in the first quarter of 2026 alone than in 2025. Communities express concerns regarding noise levels, potential tax breaks, water usage, the advancement of artificial intelligence (AI), and electricity demand. Each issue deserves its own conversation. But on the energy front, growing evidence is disproving any correlation between data centers and high electric bills; in some cases, data centers are lowering rates.
It is true that data centers—especially those powered by AI—consume massive amounts of energy and are largely driving the rapid surge in electricity demand. Small and medium-sized centers utilize 1-5 megawatts (MW) of power daily; hyperscale centers operated by Big Tech companies like Microsoft and Google generally consume 20-100 MW, enough to power an entire city.
One might intuitively infer that adding large loads equals higher electricity rates. Politicians and media outlets certainly push the narrative. But the assumption is ill-placed and unfounded.
Virginia hosts 13% of the world’s data centers and 70% of global internet traffic with an astounding 663 centers. Yet, electricity rates remain stable.
Roughly 25% of the Commonwealth’s electricity consumption comes from data center customers, but the 15.94 cents/kilowatt hour (kWh) average residential rate is below the nation’s average of 17.24 cents/kWh. Dominion Energy maintains that recent modest rate increases are “largely attributed to inflationary pressure, not the demand of data centers.”
Even a Virginia state-commissioned report found residential rate payers were not subsidizing costs for larger users, though it warns future demand will require significant new generation and transmission.
Texas, coming in second with 405 data centers, also maintains an average electricity rate below the national average: 16.05 cents/kWh.
A February Charles River Associates study found that U.S. retail electricity rates have generally tracked with inflation and are not primarily driven by data center development, protecting most consumers from cost increases. Increases are mostly due to operating expenses.
Lawrence Berkeley National Lab (LBNL) published a study in December finding that data centers are not the primary cause of rising electricity rates. Instead, data centers can lower electricity rates by spreading high fixed grid infrastructure costs across more customers.
Indeed, several states are experiencing lower rates amidst bulging demand.
Data center growth helped California, of all places. The Golden State may be known for the highest electricity rates in the contiguous U.S., but one of its major power companies Pacific Gas & Electric (PG&E) has reduced rates 11% since 2024, attributing the cuts to data center growth. Other factors keep rates high, but increased demand applies downward pressure. PG&E asserts they can lower electric bills by roughly one percent for each gigawatt of new load.
In North Dakota, utilities which saw the largest load growth over the last few years experienced the largest overall-average reduction in prices. LBNL attributes such gains to the spreading of fixed costs and an abundance of low-priced energy.
Ironically, northeastern states have much fewer data centers yet have experienced the largest electricity rate hikes. State policies and lack of generational capacity are the main culprits, not accelerating load growth. Because utilities do not own their generation, they are susceptible to higher wholesale electricity markets. Ambitious net-zero policies like renewable portfolio standards, Regional Greenhouse Gas Initiative participation, and blocking natural gas pipelines are also major contributors.
The primary mechanism behind the electricity price drops amid data center expansion trend—as seen in multiple states—is utilities’ ability to distribute the high fixed costs of building and maintaining grid infrastructure across a higher total consumption of electricity. As demand rises, those expenses spread across more kilowatt hours, lowering the cost per unit.
Data centers add a lot of steady, predictable load. Consistent round-the-clock electricity consumption at high volumes sells more kilowatt-hours, bringing more stable revenue for the utility. A lower cost per unit of electricity results. Grids operate more efficiently because demand spikes become relatively smaller compared to demand overall, reducing prices for everyone.
Some Big Tech companies are opting to go behind the meter and power their facilities, which prudently avoids ongoing energy controversies and puts them online faster. However, more open and honest discussions are needed among state leaders, lawmakers, and their constituents about data centers, energy policy, and electricity rates.
Every major emerging technology has required more energy and infrastructure. Everything digital runs through data centers, making them foundational, not optional. Questions should center on their undertaking rather than their elimination.
Kristen Walker is Senior Policy Analyst and Manager for Energy and Transportation with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on X @ConsumerPal
This article was originally published by RealClearEnergy and made available via RealClearWire.
“Virginia hosts 13% of the world’s data centers and 70% of global internet traffic with an astounding 663 centers. Yet, electricity rates remain stable.”
According to the link, residential prices per KWh went from 14.22c in Feb 2025 to 15.96c in 2026. That isn’t stable. It is a 12% rise in a year. And residents were relatively protected. The all sectors rate increased by 26% in that year.
Its cheaper than I pay in Maryland, with no data centers.
Your state is member of the Regional Greenhouse Gas Initiative. The RGGI is an illegal organization and violates Article 1 Section 10 of the US constitution. The relevant phase is: …that states cannot enter into any alliance or agreements with other states.
Go back about 5 days and read Roger Caiazza article: RGGI Status Update. He shows how this organization is costing the rate payers extra money.
You should check out the RGGI website.
Your suggestion that state to state compact are illegal, is misplaced.
States are not allowed to enter into any contract with “foreign governments”
and not domestic government unit[s].
If I am incorrect, please comment as to why.
https://constitution.congress.gov/browse/article-1/section-10/
Data centers are very convenient scapegoats.
Maryland Shut down coal, stopped gas pipelines and didn’t replace lost generating capacity with anything, just imported power from other states. Imports are currently at ~47%. Then if old power plants need to come online in an emergency, pay exorbitant prices for that power.
It never ceases to amaze me that politicians can create a problem through policy then deflect blame and journalists don’t call them out. They just replay the dishonest sound bites making “talking points” governing possible.
The journalists are mostly leftists who share the same blithe assumptions about life and governance as the politicians they cover.
Data center complaints in my area (TN) are more about poor planning, water consumption, and noise (from cooling fans). Our local rate is under $0.15/kWh (up from $0.12 a few years back).
“… data centers—especially those powered by AI “
Is there anything AI can’t do? 🙂
Convince Mad Ed to abandon Net Zero by 2050.
Data centres, tumble dryers…a couple of years I heard that people shouldn’t use their vacuum cleaners in Sweden.
The problem with electricity (cost, generation and distribution) lies more on supply side due to endless interfering of “some people” that should be better on a one way trip straight into the sun and not on the consumer side.
Yeah eco leftards and their standard recipy to cure their socialist pipepdream: blaiming others and rationing.
Does anyone remember the times before that stupidity arose on a global scale?
So if the gas cost is US$6.00/Mcf a combined cycle power station is able sell at US7c/Kwh where is the problem. Clearly any data center can build and use their own power.
The problem has been stupid authorities forbidding this happening as they bend to the RCP8.5 god.
Its dead, it is no more, as per the Monty Python parrot skit.
The question not being asked here is whether “AI powering (the demand for) data centers” is a good thing.
My view is that like most tools, artificial intelligence is a morally neutral thing. It depends on how it is used. It can make us more effective and efficient in our jobs and if that leads to more useful products at lower cost, everyone can benefit—consumers from better, cheaper goods, employees from higher productivity that supports higher wages, and of course investors.
But not every tool is morally neutral. Can AI metaphorically resemble a guillotine? On the one hand there is the prospect of a totalitarian panopticon oppression as in China, enforcing compliance with approved opinions and behaviors; and on the other hand, the prospect of UBI- and porn-addicted husks of humanity with no purpose in life. Ultimately in both scenarios, the elite are likely to conclude that there are too many useless eaters, with ominous implications.
How do we avoid those two dystopian outcomes?
In the U.S., the obvious answer is “stop electing Democrats.”
I’m all for that.
Especially a particular liberal Democrat from Queens New York City who had the Clintons at his third wedding and who was such a great businessman that he managed to bankrupt a casino.
A thrice married serial adulterer credibly accused of rape, who had the chutzpah to pretend he championed family values.
A man of We The People who is beholden to no one and cares only about American interests but who took a quarter of a billion dollars from an Israeli-American dual citizen and Israel-focused lobbying groups and who in reality seems to only concern himself with Israel’s interests.
Absolutely! Never vote for that again!
They need to fix their system: more than two parties, election days should be sun- or holidays, no gerrymandering and probably a lot of other things.
The US needs to be more like the high-functioning UK democracy, where the wrong view on a social media post can land you in prison.
Riiiiiiigghhttt-tuh!
It’s not Left vs Right anymore.
It’s Up vs Down, the elites vs the people.
Digital ID, digital currency, AI-based all-encompassing surveillance is the elite’s new scheme since Climate Change!(TM) isn’t achieving their goal.
Always has been.
But getting worse as education falters and commen sense disappears. Jeez, I hate agreeing with you…
Oregon residential rate increases from 2020 to 2024 was 30%, growth in Data Centers has been explosive. Is the increases in cost Data Center driven? Somewhat. There was an article the other day that AWS has pre-paid one of our utilities 100 million for grid upgrades and is suing not only because the upgrades haven’t been done but the utility is demanding more money. Article also states the Data Centers are sitting idle or only partially running due to the utility not having completed the upgrades.
Oregon has also ripped out it’s one and only coal plant, invested heavily in “renewable” energy and demonized gas. Oregon also wants to rip out hydro and the only replacement they plan on is renewable. Factor that in to increasing rates.