Residential electricity rates have risen more than 10% since 2024. Candidates promise rate freezes and pauses in data center construction. Utilities plan $1.3 trillion in investment over 5 years.
Electricity costs become an election issue
According to Reuters on October 31, local time, US residential electricity rates have risen more than 10% on average nationwide since 2024. Electricity rate increases have outpaced inflation in other goods and services. In Ohio, where AI data centers are concentrated, residential electricity rates have surged more than 20% over the past 2 years. In swing states including Michigan and Pennsylvania, electricity rates have also risen faster than inflation, increasing the burden on voters.
Utilities ask state regulators to allow rates to reflect the costs of expanding the grid and adding generating facilities. Regulators review investment plans and proposed rate increases, and also determine the returns utilities can earn on their investments. With electricity demand rising, concerns that ordinary households could have to share the grid costs needed for data centers have become an election issue.
Ahead of elections for governors and state public service commissions, candidates have pledged stronger oversight of utilities and lower rates. Amy Acton, the Democratic candidate for Ohio governor, pledged to lower electricity bills and pause data center construction. Republican candidate Vivek Ramaswamy said residents living near data centers would not be charged for electricity. Pennsylvania Governor Josh Shapiro pressed utility PECO to withdraw its rate increase application, while the governors of New Jersey and Virginia also took steps to reduce the burden of electricity bills.
Utility investment plans and political pressure
Applications for rate increases are also at record levels. Utilities requested a record $31 billion, approximately 41,410 billion won, in rate increases from regulators in 2025, and the total is expected to reach a similar level in 2026. Utilities plan to invest approximately $1.3 trillion in transmission networks, generating facilities and other assets over the next 5 years. The investment is intended not only to supply data centers but also to upgrade aging grids and meet growing demand.
The power industry argued that rate freezes and limits on returns could constrain long-term grid investment without substantially reducing household costs. Reduced investment could undermine electricity supply reliability and constrain the expansion of data centers that require large amounts of power. In June, credit rating agency Fitch lowered its outlook for the North American power sector from ‘neutral’ to ‘deteriorating,’ citing growing political pressure to limit electricity rates and utility profits ahead of the US midterm elections.
Reuters expected the effects of campaign pledges on actual rates and infrastructure expansion to become clearer after the elections, given that grid investments are made with a time horizon of decades. Voter demands for lower electricity bills and the need to expand electricity supply for the AI industry are expected to shape the policy choices of the next state governments.
Original Korean article: etoday.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
