As data centre energy costs rise, are consumers footing the bill?

Data centres are rapidly multiplying worldwide to support the booming growth of artificial intelligence (AI). However, AI technologies consume significantly more energy than other data centre services, meaning that not only will more data centres be needed, but each will also have higher energy demands than before.

Regulators and consumers are increasingly concerned about the effect this will have on the cost of utilities for residential and small business owners. A power capacity auction covering the mid-Atlantic region in the US in July reached record highs, driven largely by a tight supply/demand balance. The result of a high capacity auction price? Rate increases across all consumers of 11-19%, starting as early as June 2025.

Energy consumption by data centres is cited as one of the root causes of restricted availability and high power demand, which is driving the rate increases and directly impacting residential and small business consumers.

The former Chair of the Federal Energy Regulatory Commission (FERC), Neil Chatterjee, said some of the states that offered tax deferrals and rebates to data centre owners and operators may not have realised the impact that these strategies could have.

“A lot of governors and local political leaders who wanted economic growth and vitality from these data centres are now realizing it can come at a cost of increased consumer bills,” said Chatterjee.

Utilities Face Rate Change Scrutiny

According to a report from the Washington Post, residential electricity prices in Virginia, the largest data centre market in the US, are set to grow 3x faster than they have over the previous 16 years. Executives at the largest utility provider in the area say that customer bills are still low, compared to national averages and that proposed cost increases are consistent with inflation.

There are few guardrails in place to prevent utility companies from passing rate changes on to consumers. However, the companies that own and operate the data centres that are increasing demand and restricting supply are quick to recognise the issue and state their case as well.

Google’s head of data centre energy, Amanda Peterson Corio, released a statement in which she outlined the company’s position on data centre energy usage. She noted that the company is ‘working closely with our utility partners in all the communities where we operate to ensure our growth does not impact existing ratepayers’.

She also said that the energy supply contracts for Google data centres undergo a rigorous review by utility regulators ‘to ensure that Google covers the utility costs to serve us’. An email from Amazon echoed these sentiments.

“We work to make sure that we are covering those costs and that they are not passed on to other ratepayers,” said the email. Amazon clarified fees for infrastructure improvements benefit not only the data centre owners themselves but all users in the region.

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