Data Centers Have Already Shifted $23 Billion in Electricity Costs Onto the Public

A new PJM market monitor report reveals data center demand has driven $23 billion in electricity price increases across 14 states — and a regulatory loophole around 'coincident peak demand' lets hyperscale data centers dodge paying their fair share.

A report by the independent market monitor for PJM, the grid operator serving 14 mid-Atlantic and Midwest states, has concluded that expected power demand from data centers is the primary reason for $23 billion in electricity price increases that will hit residential and commercial customers through at least the end of 2028. The watchdog described the shift as a "massive wealth transfer" from ordinary ratepayers to the tech companies building AI infrastructure.

The mechanism is subtle but systemic. Under the "coincident peak demand" model, a customer group's share of grid infrastructure costs is determined by how much power they draw at the single moment when the entire system hits its annual peak. Data centers, unlike homeowners, can fine-tune their consumption minute by minute — computerized load management systems predict when peaks will occur and throttle usage just long enough to dodge the measurement window. The result: data centers avoid paying for grid upgrades their very existence made necessary, while households and small businesses pick up the tab.

Theodore J. Kury, Director of Energy Studies at the University of Florida's Public Utility Research Center, explains that the problem is compounded by a representation gap. Every state has a consumer advocate office, but most are legally barred from favoring one customer group over another — meaning nobody is in the room to argue against the data centers' expensive legal and engineering teams when cost allocation is decided. "Data centers, with the resources to hire experts in cost allocation, will submit their own proposals," Kury writes. Residential customers rarely get a comparable voice.

There is also a stranded-asset risk. Utility infrastructure investments last decades, but not every proposed data center gets built. Some may use less energy than projected. Technology could render certain facilities obsolete within a few years. If any of those scenarios play out, the costs of that unused capacity are spread across everyone else.

The Bank for International Settlements flagged a related concern in a January bulletin: AI firms are shifting from financing infrastructure through operating cash flows to taking on debt, with private credit playing a rapidly increasing role. The BIS warned that the boom's sustainability "hinges on AI firms meeting high earnings expectations" and noted that equity prices have "run far ahead of debt market pricing" — a tension that echoes the disconnect between data center power demands and who actually foots the bill.

Sources: Fortune, The Conversation, PJM Market Monitor Q1 2026 Report, BIS Bulletin No. 120