Inside the effort to make data centers pay their share of electricity costs

Lynn LaMance turns off the air conditioning at night. She unplugs appliances when she’s not using them. Whenever possible, she barbecues outside to avoid using her electric stove. 

These actions are part of LaMance’s personal pledge to keep her monthly bill as low as possible, despite the rising rate she pays per unit of electricity.

In recent years, LaMance remembers paying about $200 for electricity during summer’s hottest months. This year, her August bill was $347. 

“It felt like I was paying another car payment,” said LaMance, who lives in Dayton, Ohio, with her daughter, their cat Pete and an estimated 90 houseplants.

Many Americans share the stress of rising electricity bills, as rates increased twice as fast as inflation in 2025, according to a Columbia University white paper. At the same time, the development of large-scale data centers that train and run artificial intelligence systems has surged. Buildings packed with computers can consume as much electricity as entire cities — and that has residents asking whether data centers affect their electricity bills. 

The answer from the Trump administration is no, and that’s thanks to the White House’s Ratepayer Protection Pledge, an agreement signed by Big Tech companies, utilities and state governments aimed at ensuring residents are not burdened by higher costs because of data centers. 

But setting electric policy at the state level is far more complex than the pledge’s seemingly straightforward commitments. Straight Arrow analyzed filings with state utility regulatory organizations and interviewed consumer advocate groups across the country. In nearly every case, Straight Arrow found gray areas around who pays for new power infrastructure when a data center comes to town. 

In Arkansas, a 2025 state law created a line item on utility bills — around 4% of a typical customer’s total charge — to fund power plants under construction, at a time when data centers are driving the need for new generation resources. 

In Mississippi, an Amazon data center led to Entergy Mississippi customers paying around $10 per month for new infrastructure, according to a May study from Synapse Energy Economics.

In Virginia, a 2024 report from the state’s  Joint Legislative and Audit Review Commission projected that residents who receive electricity service from Dominion Energy could see increases of $14 to $37 per month by 2040, as the Northern Virginia data center mecca expands. 

Across the nation, backlash against data centers and calls to protect consumers have grown louder, culminating in the White House action earlier this year. But how the pledge is implemented remains an open question.

What is the ratepayer protection pledge?

“By requiring data centers to pay for their own power, water and utilities, the President has ensured the American people never foot the bill for private companies’ profits,” White House spokesperson Davis Ingle told Straight Arrow. 

The pledge is a list of commitments including that data center developers will build and pay for new power generation, pay for the infrastructure to deliver that power, and keep paying even if they do not need all of the electricity they initially planned to use. Data center developers will also invest in jobs and workforce development and contribute to strengthening the electric grid by making their private backup power available during periods of energy scarcity. 

The regulatory landscape

“A promise is only as good as the details in the docket of a public service commission,” said Daniel Tait, research and communications director at the Energy and Policy Institute, a nonprofit utility watchdog group.

When a large utility company wants to spend money on a new infrastructure project like a power plant or solar farm, it needs permission from the state regulatory agency — typically known as the public service commission or public utilities commission — to recover the upfront investment through the rates it charges customers. As operating expenses change, it also must receive state approval to increase rates and recover that revenue.

“In utility regulation, we have a very core principle, and that is that the cost causers are the cost bearers,” said David Lapp, the Maryland People’s Counsel, a state-appointed attorney who works as a consumer advocate. 

Utility dockets can contain thousands of pages of documents. The utility company makes its case as to why new infrastructure is needed. Interested parties can intervene and submit testimony for or against the utility’s plans. Details are fine tuned and commissioners — who are either elected or appointed by state elected officials — decide whether the project is justifiable in the public interest. 

“There are two important phases of a rate case: One is how big is the pie, so how much is what they call the revenue requirement for the utility,” Content told Straight Arrow. “But then the second phase of the case is always how do you divvy up the pie.” 

Each customer class — residential, commercial and industrial — pays a different rate based on how the commission allocates costs. And data centers are proving to be a stress test on a regulatory system that wasn’t designed with the scale of Big Tech investments in mind. 

Distribution costs

That test is coming amid rate increases affecting people across the country, though the Columbia paper says a multitude of regional factors such as storm readiness and recovery, fuel costs and regulatory mandates are the main drivers. 

Rate hikes often show up on the distribution part of a customers’ bill — that’s the cost to maintain lower voltage, local power lines zig-zagging across a city. In November 2025, the Public Utilities Commission of Ohio approved a rate increase for customers of utility company AES Ohio, which includes LaMance’s local provider, Dayton Power and Light Company. 

As a result, the average customer’s bill rose by 9%, according to AES Ohio. That led to frustration among the neighborhood, LaMance said, and a feeling that whatever they do to save energy, monthly payments only go up. She’s already buying energy-efficient light bulbs and has thought about unplugging every device in her home and only plugging it in when she needs to use it.

This year, the commission is considering yet another proposal from AES Ohio to raise rates. LaMance is the president of Dayton’s Fairview Neighborhood Association. When she heard about the rate increase, she began emailing her neighbors to tell them how to submit comments to state regulators.

“I always think things should be better, and I try to encourage people to also speak up,” LaMance told Straight Arrow. She especially worries about her many neighbors who are retired and on fixed incomes. 

LaMance attended a packed July town hall meeting about the rate increase, where she said “every demographic you could think of” expressed opposition to the rate hike. She left the meeting frustrated, feeling that the representatives from both AES Ohio and the Public Utilities Commission of Ohio had not adequately explained why the increase is necessary. 

AES Ohio did not respond to Straight Arrow’s questions. 

In regulatory filings examined by Straight Arrow, the utility company cites a $170 million shortfall in covering existing distribution costs on the grid for 2027; data centers are not cited as a driver of costs.

Ohio Consumers’ Counsel Maureen Willis told Straight Arrow, “generally we see that data centers really aren’t causing a lot of costs” on the distribution grid. But “there’s a lot of different places where these data center costs can pop up,” Willis added. 

She pointed to generation and transmission portions of a customers’ bill in particular. 

Generation costs

PJM is America’s largest regional electric grid serving 67 million people from the Mid-Atlantic coast to the Chicago area, including the entirety of Ohio and Pennsylvania.

The PJM grid’s capacity auction is a forward-looking market for the utilities on the grid to purchase enough resources to meet future demand. The forecasted growth in data centers is already pushing up the bids in the capacity auction, creating the clearest example of tech-driven electricity price spikes. 

Data centers caused utilities to spend an extra $29.4 billion across the past four years, according to a report by Monitoring Analytics, a firm that serves as the independent market monitor of the PJM grid.

“Those increased capacity prices are flowing through right now to the generation portion of consumers’ bills,” said Darryl Lawrence, head of the Pennsylvania Office of Consumer Advocate, an independent state agency that represents the interests of residents in regulatory proceedings.

It’s driven by simple supply and demand. When tech firms expand, there are more takers on the supply side, and it’s generally faster to connect a new data center to the grid than to build a new power plant. 

Researchers have found that the problem goes beyond the PJM grid. Between 2021 and 2025, data centers caused a 2% to 6% increase in wholesale electricity costs nationwide, according to a study from the Federal Reserve Bank of Dallas. In a mid-range scenario considered by Dallas Fed researchers, that increase could become 20% to 30% as soon as 2028. 

The Ratepayer Protection Pledge could solve the generation problem because it asks Big Tech to build or purchase its own power supply. Market reforms at PJM that would take steps in that direction are also pending. 

But Tait told Straight Arrow that doesn’t solve the whole problem for existing data centers, pointing to Georgia Power, where the utility charges existing customers for the cost of fuel to run all of its power plants, including if a data center is consuming the electricity. 

“All the cost for fuel go into the fuel rate, and everybody pays,” Tait said. “In essence, regular customers are paying more for fuel than they should.”

Transmission costs

To move electricity from power plants to customers, utilities build transmission lines. When new transmission lines are built, the cost is typically split among all electricity users. And for most of the country, the decision of cost share comes before FERC appointees.

In a complaint to FERC, Maryland’s Office of People’s Counsel argues that electric ratepayers in Maryland have been saddled with $2 billion in transmission costs to serve data centers in Virginia. That’s $2 billion out of $22 billion for baseline transmission projects that Lapp said are “driven primarily, we think, almost exclusively by data center load growth.” 

READ MORE: How data centers became America’s favorite new villain — online and IRL

Separate from the distribution rate increase, AES Ohio has a $589 million transmission project in the works called Fayette-Clinton. According to the company’s website, the project will “support the increased capacity requirements driven by load growth from large customer projects in the area.”

AES Ohio’s 24-county service area is home to multiple data center projects including developments by Amazon and Meta. 

The company’s proposed safeguards are “leaving manufacturers and other customers exposed to more than $1.3 billion in transmission upgrade costs,” according to the Ohio Manufacturers Association, one of the groups raising alarm over the cost of new infrastructure.

The regulatory system also grants the state little oversight, since the cost allocation for transmission is generally approved by FERC. And in Ohio, there is no regulatory review by the state utility commission before a project begins; only the grid operator at PJM must give the utility a green light to build. 

“As long as the project does no harm to the existing transmission system, and it promotes reliability, PJM is going to rubber stamp it,” Willis said. 

What are the solutions?

Both the electric utility industry and data center developers are — at least on the surface — taking steps to solve the cost allocation problems. 

In 24 states, regulators have approved large load tariffs, a set of rules and agreements that kick in when a large data center wants to connect to the grid. Six more states are currently reviewing proposed large load tariffs, according to Dani Marx, a spokesperson for the Edison Electric Institute. The EEI is a trade group that represents America’s largest investor-owned utilities. 

Much of that progress began prior to the Ratepayer Protection Pledge. 

“The pledge builds on that momentum by reinforcing a principle that states and electricity companies have been working toward for years: Large customers should pay their fair share, and residential customers should be protected and ultimately benefit from new investment,” Marx told Straight Arrow, in an email. 

The tariffs are designed to control for the risk that residents will pay outstanding costs if a utility builds infrastructure for a data center, only for the project to be abandoned or significantly scaled back. In a typical tariff, tech companies make a collateral down payment. And they are required to pay for a minimum portion of the costs assigned to serve them for a determined number of years, even if their data center consumes less power. 

The terms vary widely, but a typical large load tariff requires data center developers to pay for at least 70% to 85% of the infrastructure costs assigned to them for a minimum of 10 to 20 years.

Using data compiled by the Smart Electric Power Alliance, Straight Arrow identified 18 out of more than 50 utility companies that signed the Ratepayer Protection Pledge and have no large load tariff in place or pending approval. In other words, a third of the companies that signed the pledge have not taken what consumer advocates say is an important first step. 

How is it working out?

The best-case scenario for large load agreements is that they lower the share of fixed costs that residential customers pay. As Straight Arrow previously reported, the utility industry argues that adding more data centers to the grid will save customers in the long run. For example, Georgia Power says its recently approved contract for OpenAI’s 3.2-gigawatt data center will save customers $15 per month starting in 2029.

In Oregon, a large load tariff for data centers outside Portland is expected to save Portland General Electric’s other customers $900 million over 30 years, according to Sarah Wochele, an analyst at the Oregon Citizens’ Utility Board. And data centers served by Portland General Electric have seen their costs increase by 29%, Wochele told Straight Arrow.

That 29% shift validated Wochele’s hypothesis that prior to the tariff, residential and small business customers were paying an unfair share of total grid costs. She described how increased energy efficiency had lowered demand over time until “data centers kind of came in and gobbled up all that freed-up space essentially and got to benefit from that.”

Further south, the California Public Advocates Office has seen significant differences between its ideal consumer protections and the policies favored by Pacific Gas and Electric in working on Rule 30, a large load tariff for PG&E. The office is pushing for larger down payments, minimum monthly charges and early termination fees for data centers, but PG&E often argues for a lower dollar amount. 

“We’re looking to strike that balance, and there’s a lot of disagreement with PG&E,” Karen Hieta, manager for energy infrastructure at the California Public Advocates Office, told Straight Arrow. “We would like to see them more proactive. But ultimately, it comes down to the commission’s decision.” 

To some consumer advocates, even the best-constructed tariffs have significant gaps. 

“While they may be a positive step in the right direction, they are not ensuring that data centers pay their full costs,” Lapp said, pointing out that, at best, the minimum billing requirements are for 85% of the costs caused by data center development. 

It can also take longer than 20 years to pay off the infrastructure investments that go toward accommodating new large loads. For example, utility companies can spend 40 to 60 years paying off transmission lines, Lawrence said. 

‘Give the Ratepayer Protection Pledge teeth’

The consumer advocates are engaged in every step at state utility commissions, and the common refrain Straight Arrow heard from nearly every state group was “the devil is in the details.” 

And the details are still playing out while the data center boom marches on. 

“Business moves at the speed of business, especially when you’re talking about the serious players in the space — Microsoft, AWS, Meta, Google. They’re all about speed,” Lawrence told Straight Arrow. In contrast, he said, “regulatory processes do not move very quickly.” 

And to complicate matters, from the consumers’ perspective, utilities have a profit motivation to serve data centers and earn a guaranteed return on each dollar invested. 

“What they tend to do is the more you build, the bigger your investment is, the bigger your profits,” Willis said. That profit incentive could lead utilities to pursue more costly projects or overbuild infrastructure, she said. And with cost allocation questions largely unresolved, that raises the risk for ratepayers. 

Meanwhile, consumers like LaMance continue to see their bills go up, uncertain of data centers’ role. 

When she’s working from home, LaMance resorts to turning the air conditioning off for as long as she can tolerate it. She installed new insulation in her attic to make her house more energy efficient. She’s passing on the savings mentality to her daughter with reminders to turn off the lights whenever she leaves the room. 

“I don’t even do all that AI stuff,” LaMance said. She told Straight Arrow she would be angry if data center development drives up her bill. But at a system level, it’s already happening to Ohio utility customers. 

The question remains: Will the Ratepayer Protection Pledge change that?

“It’s all going to play out in the next couple years,” Willis said. “We’ll see whether FERC and PJM are willing to give the ratepayer protection pledge teeth.”

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