Utilities Soar On Surging Power Demand From Data Centers

They may look like Plain Jane utilities to you and me. But to the AI industry, they’re Helen of Troy: the faces that launched a thousand server racks. 

In respective earnings reports on Thursday, utilities giants Pacific Gas & Electric (PG&E) and American Electric Power (AEP) both reported a surge in power demand due to the massive and ongoing expansion of the energy-starved data centers fueling the artificial intelligence boom, following similar earnings reports featuring bumper profits from Duke Energy and Ameren earlier this week. But the good times may not last, and the reason has nothing to do with the AI panic attacks gripping investors every other day lately: the dynamic between AI firms and utility companies is drawing bipartisan scrutiny.

Gridlocked

Utilities are matching Silicon Valley’s capex boom to keep pace with Big Tech’s big power demands. Last year, PG&E said it planned to invest $73 billion by the end of the decade to match the surging power demand. AEP said on Thursday it is expanding its own capex plans beyond the $72 billion it had previously announced it would spend by 2030, by as much as $8 billion. 

Those costs, however, are often passed down to the consumer — and if you haven’t felt the pinch of rising electricity prices yet, consider it a stroke of mere geographic luck. In the aggregate, electricity prices jumped 6.9% in the US last year, according to a Goldman Sachs note. That’s more than double the headline inflation rate of 2.9%. Goldman also said that consumers can expect another 6% rise in electricity prices in 2027, and another 3% by 2028. Over the next decade, data centers will account for 40% of all electricity demand growth. So far, it’s been mostly great for utility firms. Duke Energy, for instance, reported full-year net income of $5 billion in 2025, up more than 9% year-over-year and more than 43% since 2023. 

It’s been less great for inflation-lashed consumers, however, and lawmakers have noticed: 

• A bipartisan bill introduced in the US Senate on Wednesday called the Guaranteeing Rate Insulation, or “GRID” Act, seeks to ban all data center-related bill increases for US households and ensure priority grid access for regular consumers. It also would require data center owners to power their operations via off-grid sources; current data centers would have 10 years to transition off-grid.
• The federal bill follows several state-level fights. Newly elected New Jersey Governor Mikie Sherrill, for instance, declared a “state of emergency on utility costs” in a move that curbed utilities’ ability to hike rates; in New York, utility regulators successfully decreased Con Edison’s planned rate increase by 87%.

On Your Own: It doesn’t stop there. The White House has similarly struck deals with tech giants, forcing the AI players to pay for their own new energy generation. Taking the hint, Anthropic on Wednesday announced it is working with utility companies to “estimate and cover” consumer electricity price increases related to its data center buildout. Consider it just another industry disrupted by AI.