Guides

Data centers and your electric bill: what's actually happening

By Kyle Tice · Updated October 2026

Data centers are raising electric bills, but mostly in one region and mostly through one mechanism. In the 13-state PJM grid (Virginia through Illinois, New Jersey through Ohio) the cost of guaranteeing enough power plants, called capacity, rose nine-fold in one auction and has stayed at the cap since. Elsewhere the effect so far is mainly on future rate cases for new generation and transmission. Here is the state of play as of October 2026.

How much demand is really coming

• EIA expects U.S. electricity sales to grow almost 2% in 2026 and 2% in 2027, after a decade near zero, with data centers and manufacturing in the commercial and industrial sectors driving it.
• PJM’s January 2026 forecast has summer peak demand rising about 85,000 MW over 15 years, to more than 241,000 MW, an average of 3.6% a year for the next decade. PJM attributes about 70% of its projected growth to data centers.
• ERCOT’s preliminary forecast showed Texas peak demand reaching 367,790 MW by 2032, four times today. ERCOT’s own CEO said the number is higher than expected future load growth and the grid operator is seeking to adjust it.
• Grid Strategies found five-year national peak forecasts rose from 24 GW to 166 GW in three years, with data centers 55% of that, but concluded the data center portion is likely overstated by about 25 GW because developers file the same project with several utilities.

The honest summary: growth is real, the forecasts are probably inflated, and utilities are building to the forecasts.

The PJM capacity auction, in four numbers

PJM buys capacity three years ahead (lately 18 months) in an auction. The clearing price, in dollars per megawatt-day, flows straight into the supply portion of bills every June 1.

The December 2025 auction cost about $16.4 billion for one year. Without the cap, PJM’s own simulation says prices would have cleared near $530.

What it did to bills. Starting June 2025, the Maryland Office of People’s Counsel estimated the auction jump added about $16 a month (14%) for BGE residential customers, $18 in the Potomac Edison zone and $14 at Pepco. New Jersey households saw over $20 a month; ComEd estimated about $10.60; PSE&G’s supply portion rose about 17%. Because the next three years cleared at the cap, these increases are not going away before mid-2029; they just stop growing.

In January 2026 the White House and all 13 PJM governors issued a statement of principles calling for a backstop auction to buy about $15 billion of new dispatchable generation, paid for by data centers that have not brought their own capacity, and for the price cap to be extended two years. PJM’s board has moved toward a backstop auction; the cost allocation is still being fought over at FERC.

Who pays for the new wires and plants

Outside the auction, the cost of new transmission lines, substations and gas plants built for large loads goes into utility rate cases. States are responding with “large-load tariffs” that make data centers commit before the utility builds:

• Virginia. The SCC created the GS-5 class for Dominion customers over 25 MW: 14-year contracts, payment for at least 85% of contracted transmission and distribution capacity and 60% of generation whether used or not, and $1.5 million per MW in collateral, effective January 1, 2027. The legislature’s JLARC study estimated unconstrained data center growth could add $14 to $37 a month to Dominion residential bills by 2040.
• Georgia. The PSC’s January 2025 rules let Georgia Power put customers of 100 MW or more on custom contracts of up to 15 years with minimum bills and upstream generation charges.
• Ohio. PUCO approved AEP Ohio’s data center tariff in 2025: 25 MW and up, pay at least 85% of contracted demand, 12-year minimum.
• Texas. SB 6 (2025) applies to loads of 75 MW and up: a $100,000 study fee, proof of site control, a share of interconnection costs, and ERCOT authority to curtail them in emergencies. The rule on how remaining costs are split between customer classes runs through December 2026.
• Arizona. HB 2756, signed June 4, 2026, lets the Corporation Commission require minimum bills, contract terms and collateral; the Commission approved a cost-protection process for the state’s cooperatives in August 2026. APS is handling large loads through long-term contracts in which the customer funds the infrastructure.

These tariffs cover costs the utility can tie to a specific customer. They do not cover the capacity auction, higher wholesale energy prices, or regional transmission that everyone shares, which is where most of the residential impact has landed so far.

What you can do

You cannot:

• Opt out of the capacity charge. It is inside the supply rate for every PJM customer, including competitive supply.
• Avoid a transmission rider approved by FERC.

You can:

1. Know which part of your bill moved. In PJM states the capacity cost resets June 1. Compare the supply rate on your June and May bills; our bill guide shows where to look.
2. Shop supply carefully in choice states. A fixed supplier contract signed before an auction reset can lock in the old capacity price for its term; one signed after cannot. See how to shop.
3. Get paid for flexibility. Demand-response programs (smart thermostat, water heater, EV charger) pay $25 to $100 a year for letting the utility trim peak load, which is exactly the hour that sets capacity prices.
4. Comment on the docket. Large-load tariffs and the rate cases that fund new plants are public proceedings. Find your utility from the state list; each page links the docket and any pending case.
5. Show up locally. Zoning and tax-abatement decisions for data centers are made by county boards, and several Virginia and Georgia counties have attached conditions on power and water.

The capacity surcharge is baked in through May 2029. Whether the next round of plants gets paid for by the loads that need them or by everyone else is being decided now, state by state.