What happened

The emergence and rapid expansion of AI data centres in parts of Maryland and New Jersey have caused a sharp increase in electricity consumption. 

These centres, which serve Microsoft and other big tech companies, require massive amounts of power for computational tasks related to AI and cloud services, which has pushed wholesale electricity prices and utility bills to record highs. 

For example, in Baltimore, residents report electricity bill increases of up to 80 percent over a few years, directly reflecting the surge in data centre power use. 

The surge in prices reflects challenges in grid capacity and cost allocation, with residents indirectly subsidising data centre energy use, prompting calls for regulatory and infrastructure reforms.

Why it happened

The increased demand from data centers stresses the existing power infrastructure managed by PJM Interconnection, one of the largest electricity grid operators in the US. 

Utilities must invest heavily in new power generation and distribution systems to keep up with demand, and these costs are passed on to consumers. 

The nature of power markets and regulation means that residential electricity users end up subsidising the huge power consumption of these large commercial data centers, as the infrastructure and capacity need to be expanded rapidly without proportional immediate benefit to all consumers.