Soaring AI Demand Drives Power Costs Surge
(MENAFN) Soaring electricity demand driven by artificial intelligence is accelerating power costs across the U.S., according to a report by media, which cites PJM, the country’s largest electric grid operator. The trend runs counter to President Donald Trump’s promises to cut household energy costs.
The spike in consumption stems largely from power-intensive AI data centers, with a significant concentration in Virginia’s so-called “data center alley.” Demand for AI computation has sharply increased since ChatGPT rose to mainstream prominence, straining energy infrastructure. Experts warn that a combination of surging AI energy needs, delays in power projects, and the closure of aging plants is forcing utilities to make expensive upgrades.
PJM, the grid operator supplying electricity to 65 million people across 13 states and Washington, D.C., announced Tuesday it will pay power producers $16.1 billion for the capacity to meet demand from mid-2026 to mid-2027. That figure marks a 10% jump from the prior year. As a result, consumer electricity bills are expected to increase by as much as 5%.
The development challenges Trump’s ongoing claims that he will cut household energy expenses in half. Data from the Labor Department shows that electricity prices have climbed 5.6% over the past year—more than double the overall inflation rate of 2.7%.
“It’s unpleasant for ratepayers,” Timothy Fox of ClearView Energy Partners told media, adding that “higher auction prices will result in higher bills for customers.”
After last year’s auction prices surged by 800%, PJM implemented a price cap. The auction sets guaranteed payments to power producers to ensure supply during peak usage periods and prevent blackouts. This year’s auction still closed near the limit, at more than $329 per megawatt-day.
The rising energy costs are compounding inflationary pressures from Trump-era economic measures, including sweeping global tariffs and his expansive “big, beautiful” infrastructure bill—both of which have added financial strain to U.S. households.
Analysts caution the energy crunch may worsen. PJM forecasts a 32-gigawatt increase in electricity demand by 2030, nearly all of it linked to data centers. Major tech companies such as Amazon are already vying for access to additional grid capacity, further driving up prices.
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