The dirty secret behind Big Tech’s data center boom

The White House and Congress promise that data centers will not cost consumers a dime. That is like a husband pledging not to beat his wife as his fist draws blood.

The politicians who spent a year gaslighting the public about data centers’ power use now acknowledge the problem and promise to cover grid upgrades. But even as they propose legislation and tout a nonbinding industry pledge, data centers are already costing consumers. It is impossible for them not to.

The growing number and size of planned hyper-scale facilities will push electricity costs even higher.

This week, the House passed the Ratepayer Protection Act (H.R. 9340) by a 417-3 vote. The bill establishes a federal standard that state regulators must consider but need not adopt. It would require large-load customers to cover the “full, incremental cost” of new or accelerated grid upgrades — not a full share of the existing system’s embedded fixed costs. That limitation helps explain the industry’s support.

If adopted and enforced, the standard could protect ratepayers. But utilities and data center companies already bury infrastructure costs among a region’s general power needs. A serious proposal would resemble Oklahoma’s House Bill 3724, which stalled in committee this year. It requires a high-demand facility to fund all infrastructure upgrades and bars utilities from allocating any cost of serving it to other retail ratepayers. That language closes the loopholes Congress leaves open.

The costs are not theoretical. Monitoring Analytics, PJM’s independent market monitor, estimated that data center load accounted for $9.3 billion, or 63%, of the increase in revenues from the 2025/2026 capacity auction. It also found that data center load in the next two auctions increased customers’ bills by $13.8 billion. The monitor warns that the near-term impact will be even larger unless PJM addresses the problem.

PJM operates the nation’s largest competitive wholesale electricity market, serving about 67 million people across 13 states and the District of Columbia. Its data center costs reach far beyond the communities hosting the facilities.

A Union of Concerned Scientists report identified $4.4 billion in transmission projects approved in 2024 across seven PJM states. Utility filings do not separate data center connection costs from transmission costs spread among all customers. In practice, those costs are folded into higher electricity rates.

The effects of Virginia’s data center boom are acutely felt in Maryland and West Virginia. Maryland’s Office of People’s Counsel says data centers — mostly outside the state — caused about $9.3 billion of a $12.5 billion capacity-cost increase in one estimate. PJM’s capacity price jumped from $28.92 per megawatt-day for 2024-2025 to $269.92 for 2025-2026 — more than 800% — and has since reached about $333.

RELATED: Big AI broke the internet. Now it wants everyone else to fix it.

Joe Lamberti/Bloomberg/Getty Images

The growing number and size of planned hyper-scale facilities will push electricity costs even higher. It is far from clear that their products can justify trillions of dollars in capital spending while covering the full cost of their power. If the economics depend on shifting costs to the public, the industry’s pledge is worthless.

The bill and pledge also ignore the use of eminent domain to take property or easements for transmission lines serving data centers. NextEra Energy estimates its portion of the 500-kilovolt Mid-Atlantic Resiliency Link will cost $960 million. The project would cross parts of four states on its way to Northern Virginia’s data center corridor. The Institute for Energy Economics and Financial Analysis estimates that West Virginia ratepayers could pay more than $570 million over the line’s 40-year life.

Meanwhile, hyper-scalers enjoy favorable federal tax treatment and lavish state and local abatements. Corporate income-tax receipts fell 25% during the first 11 months of fiscal year 2026, partly because the 2025 reconciliation law expanded deductions for business investment. Those provisions were not written exclusively for AI, but this capital-intensive industry is well positioned to use them. The boom is not purely a market phenomenon. Government favors are helping fuel it.

The first step in fixing a problem is admitting that you caused it. Until industry leaders and their allies in Washington confront the real cost of centralized AI, their promises about protecting consumers deserve no credibility.

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