AI Boom Spurs Arizona, Indiana, Maryland, New Jersey, New York, Pennsylvania To Block Utility Rate Hikes

The artificial intelligence boom is fueling fights in U.S. states over rising electricity bills and growing utility profits, with governors, attorneys general and other officials protesting the costs facing cash-strapped residents.

“As electric bills rise, some states are focusing on the growing profits of utilities As electric bills rise, some states are focusing on the growing profits of utilities HARRISBURG, Pa”

Associated Press

In at least six states—Arizona, Indiana, Maryland, New Jersey, New York and Pennsylvania—officials and lawmakers are trying to block rate increases proposed by utilities, including efforts to completely change how utilities finance major system upgrades.

Associated Press

Arizona Attorney General Kris Mayes, a Democrat seeking reelection, is challenging two utility rate increase requests before the state’s utility regulatory board, saying, "I felt like it’s never been more important to stand up against the blatant corporate greed of our monopoly utilities in Arizona."

Consumer advocates and analysts tied to the Energy and Policy Institute argue that the AI-driven demand from data centers is pushing electric prices higher and that utility profits are reaching record highs alongside rising bills, with Matt Kasper saying, "We’ve entered into this era of expensive energy and (demand) growth, and we’re seeing utility profits at record highs and rising utility bills."

The dispute is playing out as governors and regulators press utilities on rate-setting, with the Associated Press describing residents as "stuck in a broken system."

Matt Kasper of the Energy and Policy Institute, which pushes utilities to keep rates low and use renewable energy sources, said the combination of expensive energy and demand growth is producing record utility profits and rising utility bills.

Let's Data Science

Mark Ellis, a former utility executive turned consumer advocate, argued that about 10% of the typical customer bill is a for-profit utility’s "excess profit," above what might be considered reasonable under long-standing Supreme Court precedent.

Economics professor Paul Ferraro of Johns Hopkins University said targeting utility investment returns is "a political action, not an economic action," adding that it is not going to address the key challenges facing the electricity sector, including investment in modernization, expansion, renewable energies and distributed sources of power.

Utilities warn that squeezing investor returns could threaten grid reliability and modernization, and they argue that investors will move their cash to utilities in other states that promise higher returns.

“As electric bills rise in the AI boom, states take aim at utilities’ profits - Click here to listen to this article - - Soaring electricity demand from AI data centers is fueling record utility profits and higher power bills, igniting political backlash in at least six states, including Arizona, Indiana and Pennsylvania”

Los Angeles Times

The Los Angeles Times reports that the Energy and Policy Institute issued a report in March saying the profits of 110 for-profit utilities rose from just under $39 billion in 2021 to over $52 billion in 2024.

In Pennsylvania, Gov. Josh Shapiro pressured PECO, the Philadelphia-area utility subsidiary of Exelon Corp., to withdraw a 12.5% rate increase, described as $20 per month extra for the average residential customer.

The Associated Press also says the New Jersey Board of Public Utilities launched what its president, Christine Guhl Sadovy, called one of the most consequential regulatory reviews in a generation to question how utilities "should earn revenue in a modern energy system."