(Credit: Ecobee)
Electricity prices are rising nationwide as tech companies scramble to bring more data centers online to fuel their AI ambitions.
The nation's largest grid company, PJM Interconnection, plans to increase prices by more than 20% this summer, citing low supply as electricity demand from data centers spikes, Reuters reports. The cost of electricity has risen sharply nationwide since 2020, and continues to outpace inflation, according to the US Energy Information Administration.
PJM operates in 13 states in the Northeastern US, including parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia, according to its website.
The situation is so bad in Pennsylvania, where businesses are seeing a 29% increase, that its governor is threatening to abandon the service if it cannot bring prices down. PJM CEO Manu Asthana announced in April that he will step down at the end of 2025.
When ChatGPT's popularity exploded in 2023, tech giants began placing enormous bids in annual power grid auctions to secure capacity for their data centers. In PJM's 2024 auction, the going rate for power plants jumped 800%, from $269.92 per megawatt-day, compared to $28.92 the year before. The "proliferation of new data centers, [is creating] major pockets of significant load growth," PJM wrote in its 2024 annual report.
"Prices will remain high as long as demand growth is outstripping supply–this is a basic economic policy," PJM spokesman Jeffrey Shields tells Reuters. "Right now, we need every megawatt we can get."
PJM says external factors are hampering its ability to meet demand. It blames the abrupt closure of fossil-fuel powered plants and says it's unable to quickly process some 2,000 applications from renewable power projects to make up for it. Overloaded, PJM paused new applications in 2022, exacerbating the shortage.
"We need speed from PJM, we need transparency from PJM and we need to keep consumer costs down with PJM," Pennsylvania Governor Josh Shapiro tells Reuters. "I think they've taken some steps in that direction which is really encouraging to me and we're going to continue to work at it."
Chatbots consume roughly 10 times the amount of energy as a typical Google search. Even little things like saying "please" and "thank you" to ChatGPT are costing OpenAI "tens of millions of dollars" in electricity bills, CEO Sam Altman says. ChatGPT's daily consumption in 2024 matched that of 180,000 households. Forbes reports. Its user base has continued growing rapidly since then.
It's not just OpenAI—all Big Tech firms are scrambling to secure more grid power to fuel their AI ambitions. Google saw a 27% annual increase in electricity in its 2025 environmental review, along with a 51% increase in carbon emissions since 2019, The Guardian reports. It also used enough water to irrigate 54 golf courses, primarily to cool data center. This was already reaching unstainable levels before ChatGPT.
"We’re now at a stage where AI and data centers that power it are competing directly with humans for land and water and energy," a Harvard School of Public Health data scientist said at the DC Climate Week conference in May, according to ESG Dive.
Nuclear power has emerged as a potential solution, but as we're seeing with PJM, the transition will take time and energy bills could start to look a little frightening in the interim. Microsoft is reviving Pennsylvania's Three Mile Island to power its AI products, such as Copilot. Amazon and Google have also signed agreements for nuclear projects, Fox Business reports.
