The political cost of America’s surging electricity bills
Data centres powering the AI boom are straining grids and causing price rises that could hurt Trump
Martha Muir and Jamie Smyth in New York
At Ross McGregor’s family-owned factory in Springfield, Ohio, roaring presses slam, shape and weld metal to make parts for cars, farms and power plants.
His company, Pentaflex, is an energy-intensive business, and the former Republican state legislator says it is one of many in America’s manufacturing heartland that are struggling due to soaring energy prices.
In Ohio, electricity bills for industrial clients have risen 17 per cent since January 2025, and McGregor expects a 15 to 20 per cent jump when he renegotiates his contract next year.
Energy demand is soaring in the Midwestern state, which has become a hub for data centres to power the AI boom.
“Electricity is the mother sauce,” McGregor says, a term that refers to the base starting point in French cuisine.
“We can’t do anything without it.”
McGregor blames President Donald Trump and grid operators for mishandling energy policy, despite a pledge by the president to slash prices in half within a year of taking office.
“Talk is cheap,” he says.
“You can’t say we want more domestic manufacturing and have the grid not keeping up.”
Trump placed energy policy and affordability at the centre of his election campaign in 2024, with policies to boost domestic oil, coal and gas production and deliver “energy abundance”.
Cheaper energy would revitalise the economy, strengthen manufacturing and bring jobs back to the US, according to his campaign.
Yet while petrol prices have fallen by about 5 per cent since his inauguration, mainly due to sharp falls in global oil prices, the price of natural gas, home heating oil and electricity have all surged above the rate of inflation.
Between January and November, the latest month for which data is available, the cost of electricity for residential customers in the US increased by 11.5 per cent.
But the nationwide average obscures pressure points, particularly in areas where power demand is surging.
In Pennsylvania and Virginia, for example, bills for residential clients have gone up about 15 per cent, and in New Jersey commercial bills are up 5 per cent.
A broad confluence of issues is to blame. Decades of under-investment means that utilities need to upgrade ailing power grids at a time when the costs of raw materials and components have risen steeply.
Critics say the Trump administration’s attacks on renewable energy and moves to prop up the coal industry have added to consumer costs.
Rising exports of liquefied natural gas (LNG) have also driven up domestic wholesale prices.
But perhaps the most pressing factor is the new generation of data centres powering the AI boom.
The rising demand is pushing up customer bills, experts say, as the sector has failed to build enough extra electricity generating capacity or grid infrastructure.
“In many parts of the country, utilities are buying energy in the market, where price is determined by supply and demand,” says Ari Peskoe, director of the electricity law initiative at Harvard Law School.
“Demand is going up because of these data centres and supply isn’t coming on fast enough.”
Trump’s failure to deliver lower energy bills is denting his popularity.
Some 51 per cent of Americans surveyed in a New York Times/Siena University poll said Trump’s policies have made life less affordable for them, while 24 per cent said he had made it more affordable.
Democratic candidates won a clean sweep in the first major elections since Trump’s return to office, including in New Jersey and Virginia, where electricity bills were a major theme.
The Trump administration has defended its policies and attempted to blame rising prices on former president Joe Biden.
But in a moment of candour Chris Wright, US energy secretary, said Republicans were likely to be “blamed”, in an interview with Politico in August.
Since then it has passed a number of emergency directives aimed at tackling the issue.
“Affordability is something the White House can’t ignore,” says Rob Gramlich, president of Grid Strategies, a power consultancy.
“Energy dominance pursued without affordability could be a real problem at the ballot box.”
Electricity costs first burst into national politics during the Depression, when opaque monopoly utilities charged extortionate prices to customers outside urban areas, prompting President Franklin D Roosevelt to declare that “electricity is no longer a luxury.
It is a definite necessity”.
A massive build out of power plants and grid infrastructure meant that growing demand was satisfied in subsequent decades, while rising energy efficiency in the early 2000s kept demand growth low, limited price increases — and in some cases delayed upgrades to infrastructure.
Fast forward to 2026, and access to electricity is once again being spoken of as a “definite necessity” — this time for the US’s rapidly expanding technological and industrial aims.
“Winning the AI race” with China — the target of a July presidential executive order — requires data centres to be fed massive amounts of electricity from a strained power grid.
Data centre power demand will surge from 34.7 gigawatts in 2024 to 106GW by 2035, according to BloombergNEF, a research group, equivalent to more than 80mn homes.
Overall US electricity demand is forecast to jump by a quarter by 2030 and by 78 per cent by 2050, compared with 2023, according to consulting firm ICF.
“We’ve created a scarcity of electrons,” says Dan Brouillette, secretary of energy in Trump’s first administration.
“Your first reaction is to tell the kids to turn the lights off but that’s not going to work this time.”
One of the worst affected areas is the electric grid operated by PJM, which serves more than 67mn people in the Northeast and Midwest, including “data centre alley”, a hub in Virginia through which 70 per cent of global search traffic passes.
According to PJM’s market monitor, data centres were responsible for $23bn of additional costs in the grid operators’ last three capacity market auctions, which it uses to procure power supplies for future years.
The problem, says Calvin Butler, chief executive of Exelon, a utility parent company, is that utilities in the region are not permitted to build power plants and are reliant on independent power-producing companies.
For their part, independent power producers say that price caps, introduced by Pennsylvania’s Governor Josh Shapiro to protect consumers, disincentivise the building of new generation capacity.
“I 100 per cent understand why they’re politically attractive,” says Paul Segal, chief executive at independent producer LS Power.
“But they’re ultimately damaging to investor and market confidence.”
A Harvard Law School report in March reviewing 50 rate-setting processes claims utilities often subsidise data centre operators at the expense of residential ratepayers in order to win their business.
It identifies “special contracts” between the parties, approved through “opaque regulatory processes”.
“Hiding subsidies for trillion-dollar companies in power prices increases utility profits by raising costs for American consumers,” says the report.
Experts say some of the administration’s policies are compounding the problem.
Trump has targeted solar and wind energy by cutting tax credits from the Inflation Reduction Act, Biden’s flagship industrial policy.
According to climate group Resources for the Future, tax credit cuts could increase utility bills by 5 to 7 per cent by 2030.
He has also repeatedly attacked offshore wind farms under construction on the east coast, issuing a series of stop-work orders and lease suspensions.
He has justified these moves by saying renewables are “too expensive and too weak”.
Critics allege he is deliberately undermining competition to the fossil fuel industry and limiting use of technologies that are among the fastest and cheapest to deploy.
The Department of Energy has issued multiple emergency orders forcing utilities to keep ageing coal-fired electricity generation plants scheduled for decommissioning open.
It argues these actions are necessary to minimise the risk of blackouts and reduce electricity prices.
Critics say keeping these coal plants open is unnecessary, costly and technically difficult, as many are prone to breakdowns.
If this policy is maintained into 2028, it could cost customers between $3bn to $6bn a year, according to a report by Grid Strategies commissioned by environmental groups.
Trump has also made boosting LNG exports a pillar of his second term.
Exports absorb about 10 per cent of total US gas production but this is forecast to double by 2030.
Experts warn this is already pushing up wholesale gas prices in the US, particularly when household demand is high during cold or hot weather.
Last week wholesale gas prices soared to their highest level in three years during a winter storm.
This, in turn, pushes up electricity bills, as about 40 per cent of US electricity is generated in gas-fired power plants.
“Prices of natural gas and electricity are so high that many manufacturers cannot produce products at a profit and are shutting down,” said Industrial Energy Consumers of America, a group representing manufacturers, last week in a letter to the Trump administration.
Tyson Slocum, director of the energy programme at Public Citizen, a consumer advocacy group, says LNG export terminals are “diverting massive natural gas flows” towards consumers overseas.
“It means the rest of the country has to fight and bid over that declining share of available gas, which pushes the price up,” he adds.
The LNG industry says exports are not causing skyrocketing prices, instead blaming exceptionally cold weather and delays in building new pipelines and other infrastructure.
“Winter weather can be a wild card for the natural gas market.
It also highlights the need for additional infrastructure and permitting reform, which can unlock more of the benefits of natural gas, both at home and abroad,” says Charlie Riedl, executive director at the Center for LNG, an industry group.
A spokesman for the Department of Energy said it would take more time to alter the trajectory of electricity prices because of years of “energy-subtraction policies” during the Biden administration that pushed up prices.
He said the Trump administration is “reversing course” by keeping dependable coal and natural gas online, increasing domestic production and strengthening the grid.
Some factors are beyond Trump’s control.
Electricity customers are also paying for upgrades to the country’s creaking power grid, which has been weakened through historic under-investment and battered by extreme weather.
According to a report from research centre Lawrence Berkeley, storms in Florida and Maine have added more than three cents per kilowatt-hour to residential electricity prices, while investments in wildfire mitigation have boosted California bills by about four cents per kilowatt hour.
The Trump administration initially downplayed concerns over affordability, saying in December that they were a “hoax”.
But now the president, utilities and data centre companies are waking up to concerns about electricity costs, fearing a backlash.
High-profile Republicans such as Florida Governor Ron DeSantis and Missouri Senator Josh Hawley have also spoken out.
In mid-January, Trump took to Truth Social to declare he “never want[s] Americans to pay higher Electricity bills because of Data Centers”, which was followed by Microsoft pledging to cover the electricity costs of theirs.
And in an announcement days later, the White House called for PJM to hold an emergency power auction, in which money raised from big data centre operators would be used to build new power plants.
Analysts say an additional auction could help close the region’s supply gap, but warn the measure will be challenging to implement and that PJM is not bound to carry out the White House’s orders.
“Data centres can be deployed in one to two years, but the power generation to support them takes much longer,” says Tim Fox, a managing director at ClearView Energy Partners, an independent research firm.
“The tech ethos of ‘move fast and break things’ could not contradict more with the prudent processes of electric utilities.”
The complex web of utilities, grid operators and state commissions that control the electricity market means Trump himself has little power to directly bring down prices, says economist Ed Hirs.
“Typically electricity costs are a state issue, not a federal one,” he says.
“He doesn’t have a lot of road.”
Trump is trying to give federal regulators a larger role in the country’s electricity system.
In October the Department of Energy asked the Federal Energy Regulatory Commission to take jurisdiction over the connection of loads bigger than 20 megawatts, which has traditionally belonged to states.
The president is also moving to fix what he calls the country’s “broken permitting system”, which he says has been “weaponised to stall growth” and is pushing up prices.
In reformers’ sights is the National Environmental Policy Act, which was born of environmental concerns over air and water quality in the 1960s.
While well intentioned, the legislation creates “litigation doom loops” that drag out the development of new power plants and transmission lines, says Thomas Hochman, a director at the Foundation for American Innovation, a think-tank funded by the technology industry.
Permitting power generation and transmission line projects can take about four years or more.
Legislation passed by the House of Representatives in December would overhaul Nepa to allow for faster construction of energy infrastructure.
But Trump’s crusade against renewables could bury the bill as the repeated attacks on offshore wind projects complicate attempts to forge a compromise.
Data centres, which many experts blame for pushing up prices, could eventually lower bills under certain conditions, say analysts, if Big Tech foots the bill for investments in new power plants and transmission lines.
Bills may also fall if power costs are spread among a larger customer base.
Utilities are also increasingly creating special cost structures for data centres.
Utilities such as Southern California Edison are focusing on trying to entice data centres to set up in their regions.
“We see a big opportunity there,” says Erica Bowman, the utility’s vice-president of strategy, planning and performance.
“Everything’s on the table in terms of attracting folks to our service area so we can put downward pressure on rates.”
For consumer advocates such as Dana Wiggins, relief can’t come soon enough.
The director of the Center for Economic Justice at the Virginia Poverty Law Center says she’s increasingly dealing with requests for help with rising energy bills.
“It’s making [people’s] margins thinner and thinner,” she says.
Almost a third of Americans struggle to pay their electricity bills, according to a survey by Smart Energy Consumer Collaborative, a non-profit group.
This is up from one-quarter just two years ago.
And dangerously for Trump and Republicans, while Virginians point the finger of blame at utility companies and data centres, they believe it is politicians’ fault for not reining them in.
“A lot of people are attributing higher bills to data centres and utility companies being greedy, but people are definitely blaming elected officials for those issues,” Wiggins says.
With just 10 months to go to the midterm elections, Democrats such as Shapiro have seized on the issues of affordability and rising energy prices.
Electricity affordability is an issue Democrats “should be really leaning into”, Arizona Senator Ruben Gallego says.
“It’s going to be a hard problem to solve but we have to because it will affect so many working-class people.”
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