AI drives energy rate increasing in US
(MENAFN) Rising demand for artificial intelligence (AI) is pushing electricity costs higher across the US, according to the Financial Times, which cites data from PJM, the country’s largest grid operator. This trend clashes with former President Donald Trump’s promise to lower energy bills for American households.
The surge in power usage is largely driven by AI data centers, especially in Virginia’s so-called “data center alley.” Since ChatGPT’s rise in popularity, demand for AI computing has skyrocketed, putting significant strain on the electricity grid. Experts point to this growth, combined with delays in launching new power plants and the closure of older ones, as reasons utilities must invest heavily in infrastructure upgrades.
PJM, which supplies power to 65 million people across 13 states and Washington, DC, announced it will pay $16.1 billion to power producers to meet expected demand from mid-2026 to mid-2027—an increase of 10% from last year. This is expected to result in electricity bills rising by up to 5%.
These developments contradict Trump’s repeated pledge to cut household energy costs by half. Recent Labor Department data shows electricity prices rose 5.6% in the past year, outpacing overall inflation, which stood at 2.7%.
Timothy Fox of ClearView Energy Partners told the Financial Times that higher auction prices for electricity will inevitably lead to bigger bills for consumers.
PJM introduced a price cap after electricity costs surged 800% last year. The auction system pays producers to supply power during peak demand, helping prevent blackouts, but prices this year still approached the maximum—over $329 per megawatt-day.
Energy price increases also compound inflation caused by Trump-era policies, including tariffs and a large infrastructure bill, both of which have added financial pressure on American families.
Analysts warn that the energy crunch will worsen, with PJM forecasting a 32-gigawatt increase in demand by 2030, driven almost entirely by data centers. Tech giants like Amazon are already seeking additional grid capacity, which will push prices even higher.
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