Families could get see higher electric bills if AI data boom goes bust

Data centers that haven’t been built yet are driving up electricity prices and could leave consumers on the hook for expensive power infrastructure if demand projections are wrong.

The race to build facilities that provide artificial intelligence has fueled a boom in data centers that train and run large language models, like OpenAI’s ChatGPT and Anthropic’s Claude. The boom has upended a utility industry that grew used to 20 years of no increase in electricity demand.

But now, some investors and energy market analysts are questioning whether the AI race has turned into a bubble, one that would prove expensive to unravel as new transmission lines and power plants are built to support those data centers.

Consumers served by the largest electric grid in the U.S. will pay $16.6 billion to secure future power supplies just to meet demand from data centers from 2025 through 2027, according to a watchdog report published this month.

The grid is PJM Interconnection, serving more than 65 million people across 13 states, including the world’s largest data center hub in Virginia and fast-growing markets like northern Illinois and Ohio.

About 90% of that bill, or $15 billion, is to pay for future data center demand, according to Monitoring Analytics, PJM’s independent market monitor. This amounts to a “massive wealth transfer” from consumers to the data center industry, the watchdog told PJM in a Nov. 10 letter.

“A lot of us are very concerned that we are paying money today for a data center tomorrow,” said Abe Silverman, general counsel for the public utility board in New Jersey, one of the states served by PJM, from 2019 until 2023. “That’s a little bit scary if you don’t really have faith in the load forecast.”

Residential electricity prices in September rose 20% in Illinois, 12% in Ohio, and 9% in Virginia compared to the same period last year, according to data from the federal Energy Information Administration. Each of those states are among the top five markets for data centers in the U.S.

The costs associated with securing power for data centers is directly reflected in consumer’s utility bills, said Joe Bowring, president of Monitoring Analytics. “When the wholesale power costs go up, people pay more, when it goes down people pay less,” he said.

Forecast uncertainty

PJM is forecasting 30 gigawatts of extra demand from data centers through 2030, but it’s unclear how much will actually materialize in the end. That’s the equivalent of the average annual power consumption of more than 24 million homes in the U.S.

Data center developers are shopping projects around in different locations before committing to a site, so there is likely duplication in the forecasts, said Cathy Kunkel, a consultant at the Institute for Energy Economics and Financial Analysis (IEEFA).

“We’re in a bit of a bubble,” Silverman, the New Jersey official, said….