This is the third article in a series of articles exploring the facts behind the data center debate. Read part one here or part two here, and download our full eBook, The Truth About Data Centers, for a closer look at the issues covered in this series. 

If your electricity bill has crept up over the past year, there’s a clear reason for it, though data centers are only part of the story. Rates have risen across most of the country, and data centers are often named as the reason. The truth is shaped by fuel costs, aging infrastructure, market design, and how efficiently power moves across the grid, not by any single industry alone. 

Data Centers Don’t Set the Price of Power 

It’s a common misconception that data centers set electricity prices. They don’t. In states with regulated utilities, they pay standard commercial or industrial rates approved by state regulators. In deregulated markets, they negotiate rates the same way any other large business does. Either way, the price is set by the same system that determines what every household and business pays. 

That distinction matters because it changes where the real questions belong. A data center’s electricity bill is not a private negotiation happening behind closed doors. It runs through the same regulatory approval process, the same rate structures, and the same oversight that governs every other commercial customer on the grid. If rates are climbing, the answer lies in the larger system, not in any single customer’s contract. 

So What Is Actually Driving Rates Up? 

Electricity bills reflect a long list of pressures, and most have nothing to do with data centers. For example, natural gas prices rose 56% in 2025 compared to the year before, driven largely by overseas demand for U.S. liquefied natural gas exports. Utilities have also poured money into aging infrastructure replacement, wildfire mitigation, and grid hardening after years of extreme weather events. These costs are recovered through rate increases regulators approve. 

Rising demand from electric vehicles, home electrification, and industrial reshoring adds further pressure, along with policy costs like clean energy fees passed directly to ratepayers. Add it all up, and the story behind your bill has very little to do with any single industry. 

Growth and Higher Bills Don’t Always Move Together 

Many people assume that rising demand automatically means rising prices, but the data often tells a different story. A Lawrence Berkeley National Laboratory report found that states with the fastest-growing electricity demand often saw smaller rate increases, and in some cases prices actually fell. PG&E has projected that data center growth in its territory could lower average household bills by up to 2%. 

Texas, home to one of the country’s largest AI data center buildouts, operates under ERCOT, the grid operator for most of the state. ERCOT runs on real-time pricing, where electricity costs shift throughout the day based on actual supply and demand rather than being locked in through long-term capacity contracts. Rates there rose about 3.8% in 2025, close to the 2.9% inflation rate.  

Some PJM states, part of a separate grid operator spanning much of the mid-Atlantic and parts of the Midwest, use a capacity auction model instead, where utilities pay in advance to guarantee power availability years ahead of when it’s needed. While data centers are often blamed for the strain on PJM’s capacity market, several other factors play a role too, including a slow interconnection process that has left new generation, some of it lower cost, stuck in a lengthy approval backlog instead of coming online.

California tells a similar story: Rates rose just 2.1% in a year when national electricity prices jumped 6.9%, even as the state added significant data center capacity. Growth and moderate rate increases can coexist. The market rules governing how power is priced matter more than the presence of data centers themselves. 

The Bottleneck Isn’t Generation. It’s Delivery. 

Most of the public debate over data center energy use focuses on how much power they consume. That framing misses the real cost driver: getting power from where it’s generated to where it’s needed. The country can generate enough electricity to meet demand. The constraint, and the source of most delays and costs, is an aging transmission grid built for a different era. 

Dominion Energy in Virginia has faced multiyear delays connecting new facilities because transmission infrastructure isn’t ready. PG&E has said substation upgrades for large interconnections can take five years or more. Every major regional grid operator outside of Texas has reported it will miss federal deadlines for transmission upgrades. This is a systemic problem decades in the making. It existed long before the current data center buildout, and it will require the same investment and planning regardless of how fast that buildout continues. 

The demand data centers create is also accelerating the fix. Power infrastructure construction starts rose 21.2% in the first quarter of 2026 compared to a year earlier, and are projected to finish the year more than 30% above 2025 levels. That investment builds transmission capacity and grid hardening that benefit entire regions, not just the facilities driving the buildout. 

An Industry That Set Its Own Bar 

If demand and delivery are two pieces of the puzzle, efficiency is the third, and it’s an area where the industry has spent decades improving on its own initiative. 

Long before regulation required it, data center operators created Power Usage Effectiveness, a metric comparing total facility power draw to the power actually delivered to computing equipment. A score of 1.0 would mean zero energy lost to cooling or overhead, a theoretical ideal no facility reaches. The industry average today stands at 1.56, and leading facilities operate between 1.2 and 1.3. 

DataBank has made the same commitment. Our own PUE improved from 1.81 in 2020 to 1.5 by the end of 2025, a 17% improvement driven by ongoing investment in cooling technology and facility design. That progress reflects an operating discipline the industry built for itself, long before anyone required it. 

The Full Picture 

Rising electricity bills are real, and the frustration behind them is fair. The full picture shows a national grid under pressure from many directions at once, with data centers representing one piece of a much larger story utilities and regulators have been managing for years. 

Fuel costs, aging infrastructure, market design, and transmission constraints all played a role long before this current wave of data center growth. The industry’s own track record on efficiency shows a sector already working to shrink its footprint rather than expand it unchecked. Getting your bill under control means addressing the grid as a whole, not singling out any one piece of it.

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