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- Utility rates are rising in 41 states due to the increased demand from data centers on the electric grid.Data centers consumed 4.4% of U.S. electricity in 2023, and are expected to triple by 2028.Startups like Arbor and Exceleron offer solutions to help reduce utility bills amid rising costs.
If you're a utility customer in the US, you've likely seen your rates go up this year.
Residents in at least 41 states and Washington, D.C., are experiencing increased electric and natural gas bills now or will see increases in 2026, according to a new report from the Center for American Progress.
Costs are rising largely due to the AI data center development boom and the resulting strain it has placed on the country's aging electric grid.
The good news is that, depending on which state you live in and your electricity provider, you might be able to lower your bill through energy conservation. The bad news is that simple steps such as unplugging devices and turning off the lights when exiting a room are ultimately no match for the pace of rising rates.
Data centers accounted for 4.4% of electricity consumption in the US in 2023, according to a report from the Lawrence Berkeley National Laboratory. That amount is expected to triple by 2028.
Utilities across the country are predicting an additional 60 gigawatts of new demand from data centers by the end of the decade. That's enough electricity to power six major cities.
Major utilities are planning multibillion-dollar infrastructure projects to meet the enormous demand expected to come from AI. Existing regulations will allow much of those costs to be recovered from a utility's entire customer base.
In August, regulators in Louisiana approved Entergy's plans to spend $5 billion on three new natural gas plants needed to serve a massive Meta data center in the state. Consumer advocacy groups opposed the plan, arguing that average ratepayers would ultimately bear the cost for one of the world's largest companies. Similar battles are unfolding before utility regulators in states across the country.
"It's really creating tremendous stress for a huge segment of the population that struggles to pay those bills," said David Conn, head of business development and policy at Exceleron, an energy management software company.
Energy and cost-saving tactics
If you've ever reviewed your energy bill, you may have noticed that many line items factor into a monthly total. While the amount of energy you use is supposed to be the largest part of the bill, utilities often tack on charges and service fees that don't have anything to do with individual consumption. Data centers are driving up the price of those additional charges, as well as the cost of electricity, making the energy you do consume more costly.
The bottom line: If you're a customer of a utility that also serves data centers, your bill is probably going to rise no matter how much energy you use.
"It's one of those things where consumers are fighting against an 800-pound gorilla, and that's a challenge," said Larry Paulhus, head of electric consulting at RINA North America.
Experts say that despite rising costs, there are steps consumers can take to make energy bills more manageable.
Arbor is part of an emerging class of new startups aiming to help.
Utility customers who live in one of the 14 states with a deregulated energy market can use Arbor's free app to find a different energy provider. Switching providers could shave 10% to 20% off monthly utility bills, said Owen Quinlan, Arbor's head of data.
Exceleron is another one. The company offers prepay programs for 75 utilities, including major providers like Georgia Power and Salt River Project in Arizona.
Prepay programs allow utility customers to pay their bills in advance, making them eligible for refunds later on if they consume less energy than they originally paid for. With Exceleron's software, customers can track how their daily energy consumption affects their bills, and adjust habits accordingly to lower the amount of their monthly bill.
It is difficult to know exactly how much money programs like these can save customers. There are many line items on an electric bill — such as costs for new transmission lines — that are out of an individual customer's control.
Reducing a home's energy consumption by 10% likely won't equate to a 10% lower bill, said Exceleron's Conn.
"It's probably going to be less than that, but every little bit helps," he said.
Natural gas prices are also on the rise right now, according to the US Energy Information Administration.
Curbing reliance on gas fuel can help lower energy bills in the long term, said Cooper Marcus, founder of QuitCarbon, who advises homeowners on energy management.
Replacing a gas boiler with an electric heat pump and installing solar panels on a home's roof can lead to significant long-term savings.
"These are not things that people do at once overnight, but that's okay," said Marcus. "Homes last for decades. Our investment horizons should be decades."
For people struggling to manage higher rates now, long-term solutions don't offer much relief.
"It's really understandable that people want some control over their expenses, and there are things that people can do to bring down those bills. It's just not realistic for so many people," said Sylvie Ashford, an analyst at The Utility Reform Network.
Ashford noted that in California, where TURN is based, 40% of the population are renters who can't install solar panels to reduce costs.
TURN is lobbying for utilities in the state to have spending caps tied to inflation, among other initiatives aimed at lowering consumer electricity bills.
"Legislators are paying attention, and a lot of them are reporting that the number one issue their constituents call them about is their rising utility bills," she said.
