All these data centers are gonna fry my electric bill … right?

What It Covers

Data centers drive electricity prices up 7% year over year, but three scenarios determine future costs: utilities overbuilding capacity and passing costs to ratepayers, underbuilding and using expensive older plants, or achieving economies of scale that could lower bills.

Key Questions Answered

• •Overbuilding risk: Utilities tend to overbuild power capacity as their cautious approach, profiting from construction while ratepayers fund unused infrastructure. Ohio regulators mitigate this by requiring data centers to pay for at least 85% of projected electricity needs, preventing residents from subsidizing idle power plants and wasted capital investments.
• •Goldilocks scenario mechanics: Electric bills decrease when utilities build exactly the right amount of new, larger, more efficient power plants to match data center demand, and data centers pay their proportional share of infrastructure costs. This economies of scale effect makes the entire grid more cost-efficient than running legacy generators.
• •Demand projection uncertainty: Data center electricity consumption estimates for 2030 range wildly from under 7% to 16% of total US energy use. Utilities present demand stories to regulators who approve new generation capacity, but accuracy determines whether ratepayers benefit or subsidize miscalculations through higher bills and inefficient grid operations.
• •Regulatory imbalance problem: Utilities control all operational information and have significantly more resources than cash-strapped regulators for lawyers and analysts. This asymmetry, combined with utilities competing to attract data centers through sweetheart deals, creates incentives to offer subsidized rates that shift infrastructure costs to residential customers rather than data centers.