Your energy costs continue to rise. Here are all the factors you can hold responsible—including AI data centers.

Rising Utility Bills Spark National Debate

During his State of the Union address, President Donald Trump introduced a “Rate Payer Protection Pledge” aimed at large-scale tech companies, while utility executives repeatedly emphasized the importance of “affordability” in their February earnings calls—even as they rolled out new rate increases.

Last year, electricity and piped natural gas costs became the leading contributors to inflation, with prices jumping by 7% and 11% respectively in 2025. These costs are expected to continue climbing in the coming years. Across the country, utilities sought a record $31 billion in rate increases in 2025—more than double the previous year’s requests—and many of these hikes have yet to take effect.

With midterm elections approaching, the burden of utility costs has become a bipartisan issue, drawing attention from both President Trump and governors nationwide.

Unpacking the Causes of Soaring Utility Costs

Who is responsible for these rising expenses, and what can be done to address them?

While the rapid expansion of AI data centers is contributing to higher costs, experts say it is only one factor among many. Residential electricity prices have surged nearly 30% since 2021, predating the AI boom.

Industry analysts point to a combination of factors: an aging power grid, the effects of climate change, increasing costs for gas and equipment, the closure of coal and gas plants, and outdated utility profit models—all of which are driving up bills.

Multiple stakeholders—including utilities, power producers, natural gas suppliers, tech giants, policymakers, and regulatory commissions—play significant roles in either mitigating or worsening these challenges. According to Charles Hua, executive director of the nonprofit PowerLines, the debate over renewables versus fossil fuels is not the main driver of rising costs. Instead, he points to the deteriorating grid infrastructure as the primary culprit: “The grid is aging, and replacing or repairing it is extremely expensive.”

Utilities are often incentivized to invest in new infrastructure—such as power plants and transmission lines—rather than focusing on efficiency or innovation, passing these costs on to consumers.

With U.S. electricity demand projected to increase by at least 50% between 2025 and 2050, the push for capital spending is likely to intensify, leading to further price hikes.

For example, Duke Energy in North Carolina recently unveiled a five-year, $103 billion capital investment plan—the largest ever proposed by a regulated U.S. utility.

Massive Investments and Consumer Impact

The Edison Electric Institute, representing investor-owned utilities, estimates its members will invest $1.1 trillion in capital projects from 2025 through 2029. Over $200 billion was spent last year alone. “The potential impact on consumers’ bills is staggering,” Hua remarked.

Without significant policy changes and regulatory intervention, Hua warns that the upward trend in electricity prices will persist. “People are right to be concerned. This issue is now receiving much more scrutiny and public attention.”

Data Centers and the Energy Equation

This week, leading tech companies—including Amazon, Google, Meta, Microsoft, xAI, Oracle, and OpenAI—are set to sign agreements at the White House to supply their own power for data centers.

This “bring your own power” approach is expected to help, though it won’t resolve all utility cost challenges. Many tech firms are building their own generation facilities or entering long-term contracts with utilities and power producers for electricity from new plants or renewable sources.

President Trump stated, “We’re telling major tech companies they must meet their own power needs. They’ll generate their own electricity, which will help lower prices for everyone else.”

Duke Energy CEO Harry Sideris emphasized during a recent earnings call that data centers are paying their fair share in the company’s service areas. He added, “We understand that any increase in energy bills is difficult. Our priority is to keep costs as low as possible while ensuring reliability.”

The surge in AI-driven data centers has had the greatest impact on utility prices in the PJM Interconnection region, which spans 13 states and the District of Columbia. Some states, such as New Jersey, saw average electric bills rise by more than 20% in 2025 alone.

Pennsylvania Governor Josh Shapiro, initially supportive of the data center boom, has since called for stricter oversight in response to public concerns about the impact on communities, utility costs, and the environment.

PPL Corp., a utility operating in Pennsylvania, Kentucky, and Rhode Island, is seeking rate increases in those states. CEO Vince Sorgi attributes most of the bill increases to power generation shortages, natural gas prices, and severe weather, rather than utilities or data centers themselves. Over the past five years, the average monthly utility bill for Pennsylvania residents has risen by $68, with $50 of that attributed to higher generation costs and increased demand from data centers and plant closures.

Sorgi noted, “We’ve been warning about worsening generation supply issues in PJM, which are the main reason for higher customer bills. With the rapid growth of data centers, we must build new, reliable generation to meet demand.”

Climate and Supply Chain Pressures

Sorgi also points to increasingly severe weather as a major factor behind rising rates, saying, “Utilities nationwide are ramping up capital investments to address these challenges.”

Climate change is intensifying wildfires in the West and causing more frequent hurricanes, tornadoes, floods, and winter storms elsewhere, all of which strain the grid and require costly repairs and upgrades. Rising natural gas prices, equipment costs, supply chain disruptions, and tariffs are also contributing to higher rates.

Hua explained, “When fuel prices spike, those costs are typically passed directly to consumers, putting all the risk on them.”

Seasonal extremes—hot summers and cold winters—often lead to the highest utility bills. Early this year, harsh winter storms caused natural gas prices to reach their highest January levels since 2008. The U.S. grid’s growing reliance on natural gas makes it vulnerable to price volatility.

Jamie Van Nostrand, policy director for The Future of Heat Initiative, criticizes the ongoing expansion of natural gas distribution systems, arguing that unnecessary investments in long-lived infrastructure are driving up delivery charges. He notes that, compared to 15 years ago when gas bills were mostly commodity charges, infrastructure costs now make up the majority.

Van Nostrand advocates for a transition to electric heating and a greater focus on prevention, repairs, and leak detection, rather than simply replacing old pipelines.

Looking Ahead: Solutions and Challenges

While the “Rate Payer Protection Pledge” is a step forward, there is currently no federal policy governing utilities or the data center boom.

Experts recommend improved rate structures that leverage smart meters, reward homeowners for contributing solar and battery power to the grid, and encourage off-peak energy use. Expanding the use of virtual power plants and distributed energy resources could help stabilize prices during peak demand.

Utility rate increases disproportionately affect low- and middle-income households, with millions of Americans spending 10% to 20% of their income on utilities—a burden that is difficult for most to imagine.

Hua points out that the unpredictability and lack of transparency in monthly bills add to consumer frustration.

Although structural reforms have been proposed for decades, they are rarely implemented due to industry lobbying and insufficient political will. However, the issue is now front and center in national discussions, especially as utility costs may play a pivotal role in the upcoming election.

This article was originally published on Fortune.com.