Soaring Power Prices Have US Politicians Searching for Solutions
(Bloomberg) -- US politicians are scrambling to tame the soaring cost of electricity that threatens to upend this year’s congressional elections.
The Energy Department has loaned $26.5 billion — the most in its history — to help a big Southeastern utility reduce the cost of building new power plants in Georgia and Alabama. Meanwhile, the nation’s biggest grid operator has proposed capping wholesale prices and some governors are weighing utility rate freezes as a way to keep a lid on electricity costs.
The affordability problem is prompting a White House meeting Wednesday with technology executives. Trump wants the companies to sign pledges committing to foot the power bill for energy-hungry data centers, which are blamed for driving up electricity costs. Expected attendees include Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Google parent Alphabet Inc., a White House official said.
Americans increasingly are balking at the idea of paying for the electricity and other resource needs of technology firms. Utilities traditionally have spread the cost of adding a new big electricity user such as a factory among all of its customers. But that model is starting to break in the age of AI data centers.
The moves so far to curb utility rate hikes, however, may only slow the rise of power prices for consumers, which have climbed by more than 30% since 2020. And, if the promises of tech giants are anything like the ones from OpenAI and Microsoft, they will be nonbinding.
“It’s gotten very political and the companies are saying, ‘Don’t worry, we aren’t going to shift costs,’” said Paul Patterson, an analyst at Glenrock Associates. “But the devil is in the details and there is a lot of debate going on regarding those details.”
Data centers being developed today are poised to draw as much power as an American city with costs in the billions of dollars. They can require expensive upgrades before connecting to the local utility grid. A Bloomberg News investigation last year found electricity bills are 267% higher than five years ago in areas near significant data center activity.
“The challenge here is the 100-plus year old utility business model is designed to socialize the cost of our power system,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. “That model doesn’t work when you have to pay billions of dollars to serve one customer.”
In the second quarter of 2025 alone, an estimated $98 billion in US data center projects were blocked or delayed, more than the total for all prior quarters since 2023, according to Data Center Watch, a monitor run by AI intelligence company 10a Labs.
Trump, during his State of the Union address last week, said, “We’re telling the major tech companies that they have the obligation to provide for their own power needs.”
Meta, Amazon and OpenAI said Tuesday they will attend the event and sign the pledge. Google declined to comment. Microsoft didn’t immediately return a request for comment.
“President Trump’s ratepayer protection pledge will deliver more affordable, reliable, and secure energy for the American people and help stop the rising electricity prices that started during the previous administration,” Energy Secretary Chris Wright said in a statement provided to Bloomberg News. “This plan will strengthen American energy dominance, while also ensuring the United States wins the AI race.”
It will be tricky, however, to determine which expenses should and can be shouldered by the data center developers, such as the costs to build new transmission lines. In wholesale power markets like PJM Interconnection, which serves 65 million people in the Midwest and Mid-Atlantic, those kinds of capital costs will be shared by all consumers for now, barring any major rule changes.
“The ratepayer protection plan is a show designed to sweep this issue under the rug and show the White House has solved the problem,” Peskoe said. “The White House has no real authority here aside from the bully pulpit.”
The technology pledges won’t have much meaning until utilities are filing contracts with federal and state regulators that force data centers to be responsible for the costs, Peskoe added.
The ratepayer pledge requires the companies that signed it to negotiate separate rate structures with utilities and state governments and commit to pay these rates for the power and related infrastructure brought online to service their data centers, whether they use the electricity or not, according to a White House official.
The official pointed to a plan floated in January by Trump and governors from Mid-Atlantic states that would compel tech companies to pay to build power plants in the PJM market as a way to ease wholesale price increases, although that move also would require a number of regulatory changes. PJM plans to extend caps on future wholesale power market auctions, although they are set at high levels.
In addition, the Trump administration is tapping the government’s balance sheet to help reduce the financing costs of power infrastructure. The Energy Department said its loan to Southern Co. will result in a $300 million reduction in the company’s interest expenses, helping “expedite lower electricity costs for customers.”
Some utilities in states including Ohio, Michigan and Virginia are moving to require data center developers to pay for their share of grid upgrades or commit to take-or-pay contracts where they promise to cover the expense of their projected electricity demand even if it less than forecast. Those agreements, however, have yet to be tested over time and don’t cover all of the costs.
“The goal is to make sure consumers have some protection up front,” said Derrick Flakoll, an analyst for BloombergNEF.
In Texas, data centers are now required to reduce their demand during periods of grid stress as a way to prevent wholesale price spikes. Federal regulators are looking at a similar arrangement for PJM.
Other states are taking a more populist approach. In New Jersey, Governor Mikie Sherrill, who won her election on a promise to make power bills more affordable, issued an executive order in January freezing utility rate hikes. That same month, New York Governor Kathy Hochul unveiled a ratepayer protection plan that includes greater scrutiny of utility rate increase requests.
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