The rapid expansion of data centers, fueled by the demands of artificial intelligence and cloud computing, is triggering a political and economic backlash as electricity costs surge across the United States. From Pennsylvania to Illinois, and stretching across the Mid-Atlantic states, lawmakers are increasingly focused on ensuring that tech companies, rather than residents, bear the financial burden of powering these energy-intensive facilities.
The core of the issue is simple: data centers consume vast amounts of electricity – comparable to a small city – and their proliferation is straining power grids already grappling with aging infrastructure and fluctuating energy prices. A 2025 Bloomberg News analysis found that electricity costs in some areas with new data center construction have jumped as much as 267% compared to five years prior. This spike is particularly acute in states like Maryland, Virginia, New Jersey, and the District of Columbia, where data center growth has outpaced the development of new power generation capacity.
The political pressure is mounting. As reported by the Associated Press, even President Trump has weighed in, joining a chorus of bipartisan voices demanding that tech companies pay their fair share. This sentiment reflects a growing concern that ordinary citizens are subsidizing the AI boom through higher electricity bills. The situation is further complicated by the fact that while tech companies are making commitments to cover their energy costs, regulatory mechanisms to enforce these promises remain limited.
Seven major tech companies – Google, Amazon, Microsoft, Meta, Coreweave, Equinix, and Digital Realty – recently responded to inquiries from Senators Elizabeth Warren, Richard Blumenthal, and Chris Van Hollen regarding their data center footprint and power procurement strategies. Google, for example, stated it would cover all electricity costs associated with its data centers and adjust its energy management practices during peak demand periods, when data center usage can exacerbate price increases for other consumers. However, the effectiveness of such commitments hinges on robust oversight and enforcement.
The financial implications extend beyond residential electricity bills. Goldman Sachs analysts predict that increased power prices will contribute to a 6% jump in consumer electricity inflation between 2026 and 2027, before moderating to 3% the following year. More significantly, these higher costs are expected to be passed down to consumers through increased prices for goods and services, impacting sectors like hospitality and food service. The analysts warn that higher business production costs, driven by elevated power prices, will contribute to broader inflationary pressures.
Data center investment reached over $61 billion in 2025, as hyperscalers aggressively expanded their computational capacity to support the AI race. Alphabet, Microsoft, Meta, and Amazon are collectively projected to spend $700 billion on AI build-outs in 2026 alone, further intensifying the demand for electricity. This investment surge is unlikely to translate into lower prices for consumers anytime soon, according to analysts.
However, Amazon argues that its data centers do not contribute to increased electricity bills for others. An independent study commissioned by Amazon and conducted by Energy and Environment Economics (E3) found that Amazon fully covers its own electricity costs. The study also suggested that Amazon data centers can even generate surplus revenue that utilities can reinvest in grid improvements. A separate report by Charles River Associates for the Edison Electric Institute also found that data centers were generally not the cause of rate increases in areas where prices rose, attributing increases to factors like aging grid infrastructure and extreme weather events.
Despite Amazon’s claims, the broader trend indicates a growing strain on the power grid. Utilities requested a record-high $31 billion in rate increases in 2025, more than double the amount requested in 2024, according to data from the nonprofit PowerLines. This surge in requests underscores the financial pressures facing utilities as they attempt to modernize infrastructure and meet the escalating demand from data centers and other sources.
The debate over who pays for the data center boom is likely to intensify as more facilities come online. The situation in Illinois, where a CyrusOne data center in Aurora has drawn complaints about noise and rising electricity bills, exemplifies the local tensions surrounding data center development. The fundamental question remains: how to balance the economic benefits of the AI revolution with the need to ensure affordable and reliable electricity for all consumers.
The lack of comprehensive regulation is a key challenge. While tech companies may offer commitments to cover their energy costs, the absence of binding rules creates uncertainty and leaves consumers vulnerable to price spikes. Legislative action and regulatory reforms will be crucial to address this issue and ensure a more equitable distribution of the costs associated with powering the digital economy.
