Yves here. Citizens who protest them are not Luddites. They are correct to see data centers as economic predators. And unlike private equity rentierism, data center buildouts are hard to hide.
The calculation of how ordinary rate-payers carry way way more their fair share of data center costs comes from US utility pricing models. Can any readers report if this is similar to electricity pricing in their country?
By Tsvetana Paraskova, an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities, and the geopolitical and economic developments shaping supply and demand. Originally published at OilPrice
- Data centers covered only 38% of the $8.25 billion in grid costs tied to their growth in 2025. Residents got most of the other $5.13 billion.
- Grid costs are split by past usage, not future growth, so households in New Jersey, Pennsylvania and Ohio help fund Virginia’s data center build-out.
- The study’s authors want states to charge data centers directly for new demand, and they point to Minnesota’s data center fee for low-income utility programs as one model.
The booming AI industry is consuming more and more power with each data center springing up across the United States. The surge in power demand necessitates grid upgrades and expansions in the energy infrastructure.
But the costs are not allocated fairly, and households end up picking up the bill. Among residents, the costs are also disproportionately distributed, with the heaviest burden falling on rural and lower-income households, Cornell University researchers say.
This week, Cornell researchers published a study in the scientific journal Nature Energy, which analyzed growth in energy demand and infrastructure projects for four major U.S. power grids from 2020 to 2025.
The research found that data centers hiked wholesale electricity prices last year. But these same data centers paid just 38% of the infrastructure costs linked to their growth, or $3.12 billion out of an $8.25 billion bill in 2025.
The remaining 62%, or a massive $5.13 billion bill, fell largely on residents, “with the lowest income households seeing extra energy costs up to 28% of their incomes,” Cornell researchers said.
Transmission investment in energy infrastructure projects surged from $2 billion in 2020 to $34 billion in 2025, with data centers driving much of that rise, the research has found.
In regulated tariffs, residential users are allocated a median of 47% of costs despite contributing far less to demand growth, leading to disproportionate energy burdens. The cost sharing forces rural communities to bear increases 76% larger than urban communities, the researchers wrote in the study.
The core of the problem with household bills and the growing backlash against data centers, which became clearly evident in the midterm elections, lies in the way the costs for new power projects are currently being allocated.
At present, the allocation is often based on previous patterns of energy consumption, not on forecasts of future growth.
“It’s kind of a chicken-and-egg problem,” said Fengqi You from the Cornell Duffield College of Engineering and co-author of the study.
“Because if you’re going to build a data center, you need to expand this power infrastructure. Otherwise, there’s no electricity for them to run. But before they build, they’re not using energy,” You added.
“So with this model of relying on past consumption, households end up taking on much of the infrastructure costs.”
Moreover, the study found that the current cost-sharing rules mean that residents in New Jersey, Pennsylvania, and Ohio help pay for grid upgrades linked to data center growth in Virginia.
“You do not have to live next to a data center to help pay for its power infrastructure,” You said. “The grid connects communities across states, and cost-sharing rules connect them financially.”
You and the study’s first author and Cornell postdoctoral researcher Cheng Feng recommend changes to cost-sharing rules to lower the burdens on communities, as well as various state-level measures to charge data centers directly in line with the new demand they add. States could also set up programs, such as a recent law in Minnesota that created a special revenue fund in the state treasury to which money must be transferred from the fee on qualified large-scale data centers. The fee revenue must be used only for utility programs benefiting low-income households, per Minnesota’s new law.
The backlash against data centers in the midterms, and residents’ concerns that communities are paying and will keep paying for the infrastructure upgrades needed to power these data centers, are stirring debates in many states and in Congress, which the Democrats will control from 2027.
Significant state-level changes to the way costs are allocated and distributed are highly likely, amid affordability issues and high energy prices and Democratic governors elected in data center hotspots such as Ohio and Texas.
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