AI contributes to rise in electricity prices across US
(MENAFN) A surge in demand driven by artificial intelligence (AI) has contributed to rising electricity prices across the United States, according to reports citing the nation’s largest grid operator, PJM. This trend conflicts with former President Donald Trump’s promise to reduce energy costs for American households.
Energy consumption is climbing due to AI data centers, particularly in Virginia’s “data center alley,” where AI computing needs have expanded dramatically since the popularization of tools like ChatGPT. Experts warn that this surge, combined with delays in new power projects and the closure of older plants, is forcing utility companies to invest heavily in infrastructure upgrades.
PJM, which manages electricity for 65 million people across 13 states and Washington, D.C., announced plans to pay power producers $16.1 billion to meet anticipated demand between mid-2026 and mid-2027—a 10% increase from last year. This is expected to translate to up to a 5% increase in electricity bills for consumers.
This rise poses a setback to Trump’s repeated commitment to halve household energy expenses. Data from the Labor Department indicates that electricity prices have increased by 5.6% in the past year, outpacing the overall inflation rate of 2.7%.
“It’s unpleasant for ratepayers,” Timothy Fox of ClearView Energy Partners told the Financial Times, noting that “higher auction prices will result in higher bills for customers.”
Following a previous surge where prices jumped 800%, PJM implemented a price cap on its auction system, which determines payments to power producers during periods of peak demand to help prevent blackouts. Despite this, this year’s auction prices remained near the cap, exceeding $329 per megawatt-day.
The escalating energy costs add to inflationary pressures stemming from Trump-era policies, including global tariffs and the expansive infrastructure bill, both of which have increased financial strain on American families.
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