Why Utility Bills Are Rising: AI Data Centers, Transmission Bottlenecks, and Trump's Energy Agenda
Many Americans are paying more for electricity this summer, with utility costs climbing nationwide. Federal data shows electricity prices are up 5.5% compared to a year ago, while natural gas costs have surged 13.8%.
Electricity bills soar as U.S. demand climbs, AI data centers expand, and Trump’s energy policies reshape the nation’s power grid.
Jonathan Ernst/Reuters
Analysis from the Center for American Progress reports that nearly 60 utility companies plan to raise electricity rates in 2024, totaling over $38 billion in additional costs for more than 57 million households.
President Donald Trump recently blamed renewables for rising prices, calling them “THE SCAM OF THE CENTURY!” on Truth Social. He has pledged to block new wind and solar projects. Energy analysts, however, point to soaring demand from artificial intelligence data centers, oil and gas drilling, electrified transportation, and heating systems as primary drivers of higher costs.
Rob Gramlich, president of Grid Strategies, explained that after decades of stable consumption, energy demand rebounded following the pandemic and continues to climb. Russia’s invasion of Ukraine also disrupted global energy supply chains, further contributing to U.S. price increases. The nation may require 15% more power capacity—about 120 gigawatts—by 2030 to keep up with growing demand.
The U.S. Energy Information Administration projects residential electricity rates could rise by up to 18% in the coming years, well above the 2.7% annual inflation rate. Gramlich stressed that the fastest solution is expanding supply, but challenges remain.
Transmission Bottlenecks
At the end of 2023, more than 2,600 gigawatts of energy projects awaited grid connection, according to Lawrence Berkeley National Laboratory. Roughly 95% of this capacity comes from solar, wind, and battery storage. Expanding transmission by 60% by 2030 will be necessary, with even greater growth required by 2050, according to the Department of Energy.
AI data centers are adding additional strain. MIT researcher Norman Bashir noted that AI-focused centers consume up to 10 times more power than traditional data facilities.
Supply Chain and Equipment Delays
The expansion of energy projects also faces higher costs from tariffs and shortages of critical equipment. Gas turbines, for example, have nearly tripled in price, with wait times ranging from three to seven years, according to S&P Global.
Over the past decade, the U.S. energy mix has shifted toward natural gas and renewables like wind, solar, and hydropower. Coal continues to decline, and new nuclear facilities are not expected before 2030.
Trump Administration’s Energy Policies
Since returning to office, Trump has rolled back Biden-era clean energy initiatives and declared a “National Energy Emergency.” His administration has prioritized fossil fuels, canceling more than $22 billion in renewable projects, according to analysis by E2.
Energy Innovation projects that the One Big Beautiful Bill Act (OBBBA) will increase wholesale energy prices by 74% by 2035, translating to a $170 annual rise in household bills. The legislation is also forecast to reduce generation capacity by 340 gigawatts and result in up to 760,000 job losses by 2030.
The Department of Energy, however, has defended the OBBBA, stating it ends taxpayer subsidies for wind and solar and promotes reliability.
Coal Plants Kept Online
To meet short-term energy needs, the Energy Department has directed utilities to delay coal plant retirements, potentially costing ratepayers more than $3.1 billion annually by 2028. Extending coal facilities further could add more than $6 billion to costs by 2035, according to Grid Strategies.
Coal’s share of U.S. power generation fell to 15.2% in 2023, down from 45% in 1990, as natural gas and renewables gained ground. Yet the administration continues to keep fossil fuel generation active to support grid reliability during growing demand.
Energy Secretary Chris Wright defended the strategy, saying reliable fossil fuel sources are necessary to stabilize the grid, support AI growth, and prevent electricity prices from escalating further.
