Utilities demand higher fees from tech companies to offset power grid costs.

Utilities in the US are asking tech companies to pay more to connect new data centers to the power grid, citing concerns that the cost of new infrastructure could raise rates for regular customers. Companies like Google, Microsoft, and Amazon rely heavily on electricity to power their data centers. Utilities are seeking higher fees to offset the cost of upgrades needed to support data-center demand.

Title: Utilities in the US Ask Tech Companies to Pay More for Data Center Connections

Utilities across the United States are increasingly demanding higher fees from tech companies to connect new data centers to the power grid. This move is driven by concerns that the cost of new infrastructure needed to support the growing demand from data centers could raise rates for regular customers. Companies like Google, Microsoft, and Amazon, which heavily rely on electricity to power their data centers, are at the forefront of this issue.

According to a recent report by Monitoring Analytics [1], data center power usage accounted for $9 billion, or 174%, of increased power costs between 2024 and 2025. This significant growth has led utilities to reassess their pricing models to ensure that the costs associated with data center expansions are not disproportionately borne by regular consumers.

The report also highlights that the growth in data center load is unique and unprecedented, requiring a different approach than simply attributing it to supply and demand dynamics. Joseph Bowring, president of Monitoring Analytics, emphasized that data centers are a separate class that should be treated differently due to their rapid growth and impact on the grid [1].

In response to these challenges, utilities are proposing higher fees to offset the cost of upgrades needed to support data-center demand. For instance, Dominion Energy in Virginia has requested an additional $10.50 increase on the monthly bill of an average resident to cover higher fuel costs [1]. This trend is not isolated to Virginia, with similar requests being made by other utilities across the country.

The Federal Energy Regulatory Commission (FERC) has convened technical conferences to assess the adequacy of power supplies in major regions like PJM, ISO New England, and CAISO. Monitoring Analytics asserts that the current supply of power is not adequate to meet the current and future demand from large data center loads [1].

To mitigate these concerns, some states are exploring new policies. For example, New Jersey is considering a bill that would require new AI data centers to supply their power from new, clean energy sources. Utah has enacted a law allowing "large load" customers like data centers to craft separate contracts with utilities, while Oregon has passed a bill creating a separate customer class for data centers called the POWER Act [1].

The growing energy demands of AI infrastructure are also evident in projects like the massive AI data center planned for Cheyenne, Wyoming. This facility, a joint venture between Tallgrass and Crusoe, is set to consume more electricity than all Wyoming homes combined, highlighting the significant impact of AI data centers on local energy consumption [2].

In conclusion, the increased demand for data center infrastructure is leading utilities to seek higher fees from tech companies to ensure that regular customers are not disproportionately affected by the costs associated with these expansions. As the demand for AI continues to grow, it is crucial for utilities, tech companies, and policymakers to work together to find sustainable solutions that balance the needs of all stakeholders.

References:
1. [1] https://www.columbian.com/news/2025/jul/27/ai-data-centers-are-using-more-power-regular-customers-are-footing-the-bill/
2. [2] https://theoutpost.ai/news-story/massive-ai-data-center-planned-for-cheyenne-wyoming-raising-energy-consumption-concerns-18335/