Evidence is emerging that the more popular an area is for data centers, the steeper the electricity rate hike for the nearby community. A recent Bloomberg investigation found that “electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data center activity.”
In part as a result, electricity affordability and data centers have become a hot political issue for Democrats and Republicans alike, and a source of intense debate in local elections.
And state lawmakers are beginning to take action. Legislatures both red and blue are moving to try and shield consumers from the steep rate increases that are occurring all over the U.S., as load growth forces utilities to upgrade their infrastructure and add capacity. In the first half of 2025, utilities have requested or secured $29 billion in rate increases, more than double 2024’s hikes.
An April analysis from the National Caucus of Environmental Legislators found that there were over 60 pieces of legislation related to data center development introduced in 2025 across 22 states — most of them focusing on ratepayer protection.
Just last week, for instance, California Gov. Gavin Newsom signed into law a provision to address the impact that artificial intelligence and data centers are having on energy demand and the cost of electricity.
Senate Bill 57 directs the California Public Utilities Commission to conduct an assessment of how costs associated with new loads from data centers “result in cost shifts” to other ratepayers. Due by January 2027, the assessment will be required to take into account costs tied to utility procurement operations as well as to the installation of new transmission and distribution assets, “including the costs of stranded assets and assets installed for an entity that ceases operation.”
In a press release, the bill’s sponsor Senator Steve Padilla noted that “this study is critical to ensure ratepayers do not have skyrocketing energy costs.”
According to the NCEL’s tracker, this is just the latest of seven of these laws that have been enacted so far. The most well-known is Texas’ SB 6, signed into law in July; it mandates a re-evaluation of existing cost allocation methodologies to ensure their fairness, and requires that new large loads contribute to the grid upgrades implemented to serve them.
Meanwhile, New Jersey passed a law in July requiring the Board of Public Utilities “to conduct a comprehensive study on how the electricity demands of data centers are influencing utility costs across the state.” The legislation directs the state’s BPU to find out if customers “that are not data centers” are “unreasonably” subsidizing them — and specifically supporting the development of new transmission, distribution, and generation assets that would not otherwise be needed. It also requests the assessment of various policy alternatives, “including the use of a special tariff to be applied to data centers within the State, that could be used to mitigate or avoid rate increases.”
And Oregon enacted the POWER Act, short for “Protecting Oregonians With Energy Responsibility,” directing the Public Utility Commission to create a new classification for data centers and large energy users with its own tariff, to avoid other electricity consumers paying “unwarranted costs.”
But not all of the momentum is happening at the state level. Last month, House Representative Alexandria Ocasio-Cortez announced she had included a “request to study the impact rapidly expanding AI data centers would have on utility bills for consumers” in the FY 26 Energy and Water Appropriations Act. (That effort isn’t yet written in law; while the House has passed its bill, the Senate Appropriations Committee didn’t finalize their version before the ongoing government shutdown began on October 1.)
These measures come as utilities embark on a record spending spree. The trade group Edison Electric Institute, which represents investor-owned utilities, recently found that its members are on track to spend nearly $208 billion this year to bolster the electrical grid. Between 2025 and 2029, their capital expenditures are likely to hit $1.1 trillion, nearly matching the combined $1.3 trillion spent over the decade from 2015 to 2024.
A version of this story was published in the AI-Energy Nexus newsletter on October 15. Subscribe to get pieces like this — plus expert analysis, original reporting, and curated resources — in your inbox every Wednesday.
