Leaders in both parties are locked in competition to encourage tech giants to put sprawling data centers in their states, looking for an economic leg up and an innovation edge in the early days of the artificial intelligence boom.
Now, those same leaders are dealing with a downside that’s more apparent by the month: Those electricity-hungry data centers are a major contributor to rising utility bills for cost-conscious residents who have been concerned about rising prices for years.
“Voters are mad as hell about energy prices increasing,” Virginia state Del. Shelly Simonds, a Democrat, said. “And they’re mad about affordability in general. And anybody who ignores these issues does so at their peril. It’s definitely going to be an issue during the midterms.”
This is becoming clearer in her state — considered the nation’s data center hub — and New Jersey, which has experienced some of the largest year-over-year electricity bill hikes on a percentage basis. They also happen to be the two states with the biggest elections this fall.
Data centers are required to run everything from Uber to Netflix to Amazon. But those required to run artificial intelligence programs demand an outsize amount of power compared with their predecessors: A recent Bloomberg News analysis of electricity prices across the country found that monthly electricity costs have gone up as much as 267% compared with five years ago in locations near substantial data center activity.
While the nominees for governor in both states have promised to tackle rising prices, leaders say they have yet to hear much discussion of the data center angle. NBC News spoke with 14 elected officials and stakeholders for this report on how states are handling the data center boom — and everything that comes with it.
“People are now looking at this, going, ‘What the hell is going on?’” Virginia state Sen. Richard Stuart, a Republican, said. “And rightly so. And to be honest with you, it should be a big part of the campaign, but I don’t know that I’m hearing it.”
The reality of interconnected, interstate power grids means cost increases can spread across multiple states, regardless of where a data center is located. Last month, Pennsylvania Gov. Josh Shapiro, a Democrat, convened a meeting with leaders from all 13 states served by PJM Interconnection, which operates the electric grid servicing all or parts of those states. Shapiro suggested his state could withdraw from the system, which includes New Jersey, Virginia and Pennsylvania, if PJM didn’t do more to control costs for consumers. Elected leaders and PJM have joined to call for speeding up power projects.
“The bottom line about electricity prices is that we are facing a situation of demand outpacing supply, causing prices to rise,” Daniel Lockwood, a spokesman for PJM, said in a statement. “Demand for electricity is growing, not only in PJM, but across the United States, driven by data centers that power the digital economy and the development of artificial intelligence as well as the electrification of vehicles and building heating systems.”
Earlier this year, the consulting firm Monitoring Analytics, which provides market analysis for PJM, estimated data centers accounted for 63% of price increases for the coming year.
'Large boxes that create cash value'
In courting companies like Meta, Microsoft and Oracle to open data centers in their states, officials have offered significant tax breaks and benefits. The companies argue those developments provide huge tax revenue increases for the states and localities that host them, in addition to job growth — particularly construction jobs to get the data centers off the ground. Their advocates in and out of government say places without data centers will be left behind in the race to break new ground in AI.
But many lawmakers who spoke with NBC News said that beyond the additional tax revenue, they weren’t seeing many other benefits to their constituents, while those same residents are seeing their utility bills — and property tax assessments — rise.
“I don’t care what anybody says, data centers don’t produce jobs,” said Stuart, the Republican who has worked on a number of data center-related bills in the Virginia state Senate. Data centers do create property tax and other tax revenue, he noted, “but with that revenue comes a heightened cost to the taxpayers.”
Virginia state Del. Josh Thomas, a Democrat who has also been involved in numerous data center bills, said he didn’t think there were many direct benefits of opening a data center beyond the increased tax revenue.
“They’re just large boxes that create cash value,” he said. “They do create jobs during the construction process, and there are a few maintenance jobs that certainly will provide a generation’s worth of work for a few people, but they’re not job creators, the way other industries are that would take up that footprint.”
There’s one legislative fix lawmakers in both states want now. State legislators said utility companies are building or repairing electrical infrastructure to accommodate data center needs and then passing the costs on to consumers, rather than having them financed by the tech companies, due to existing rules.
New Jersey state Assemblywoman Andrea Katz, a Democrat, introduced a bill last month to create a data center surcharge that would go toward modernizing the state’s electric grid.
“Our grid needs a lot of improvements, and those improvements are very, very expensive,” she said, adding, “I’m not saying remove these data centers. They just need to contribute to the community in the same way that all the other businesses do.”
Few data center-related bills have become law. In Virginia, legislation routinely stalls out or is vetoed by Gov. Glenn Youngkin, a Republican. Little has passed in New Jersey, though Gov. Phil Murphy, a Democrat, in July signed a bill to study data center impacts.
Dan Diorio, vice president of state policy for the Data Center Coalition, a group that advocates on behalf of the industry, highlighted the jobs, tax revenue and economic development connected to data center growth, adding the industry “is committed to paying its full cost of service for the energy it uses, including transmission costs.”
Some tech companies are now building — or reopening — energy sources to power their data centers, including in Pennsylvania, where a company is powering up the Three Mile Island nuclear facility on behalf of Microsoft. Pennsylvania leaders, alongside President Donald Trump, this year announced $92 billion in AI and energy projects. The Trump administration has given latitude to the AI industry to grow in hopes the U.S. can beat China in AI developments.
“The data center industry recognizes that grid planning and management are ultimately the responsibility of utilities, grid operators and regulators,” Diorio said. “That said, the industry will continue to lean in as a committed and engaged partner to work with policymakers in helping ensure an affordable, reliable grid for all customers.”
A new front in two 2025 elections
Public opinion on data center development is scant, and there’s no indication it has polarized along partisan lines the way longer-term issues have. Local opposition has picked up, however, more recently — including in Virginia.
“Something very interesting is that there is greater coordination at this within the state level,” Miquel Vila, an analyst at Data Center Watch, a project of AI intelligence firm 10a Labs that tracks local data center activity.
Stuart described the opposition he’s starting to see to data centers in his state and district as “the most interesting union you’ve ever seen.”
“Because you’ve got the farmers, you’ve got the environmentalists, you’ve got the people who just love rural Virginia,” he said. “And so there’s a very broad coalition. … They’re not trying to build a fence and a gate, but they want answers.”
Leaders in both parties are trying to walk a fine line between addressing voter concerns about price hikes and not scaring away tech investment.
“I actually haven’t seen data centers in either of their energy plans,” an aide to Murphy said of the race to succeed the term-limited governor, “because then you’ll have to say, ‘I want to dampen the development of data centers.’”
The issue has gotten new attention from the gubernatorial candidates running in those key 2025 elections, though.
As part of former Rep. Abigail Spanberger’s energy platform, the Democratic nominee for governor in Virginia calls for “making sure data centers don’t drive up energy costs for everyone else in Virginia — including by paying their fair share of the cost of new electricity generation and transmission.”
“Virginia is overdue for a statewide strategy on data centers that helps localities across every corner of the Commonwealth make informed decisions about their best path forward,” Spanberger said in a statement.
Spanberger’s GOP opponent, Lt. Gov. Winsome Earle-Sears, did not respond to requests for comment.
When both candidates were asked about data center-connected costs during a gubernatorial debate last week, Spanberger talked up her point on making the companies pay a “fair share” while Earle-Sears said Democratic-backed clean energy policies were to blame for rising costs.
In New Jersey, Rep. Mikie Sherrill, the Democratic nominee for governor, has pledged to declare a “state of emergency” on utility costs while promising to boost her state’s “innovation economy to create good-paying jobs and supercharge economic growth.”
“It’s true that AI data centers are significantly increasing energy demand and that new energy generation supply hasn’t kept pace, contributing to massive utility rate hikes,” she said in a statement. “We have to take immediate action to reduce these prices for families while still supporting the creation of good-paying jobs for New Jerseyans, and companies with data centers … must pay their fair share of the cost of generating and transmitting the energy they consume.”
Republican gubernatorial nominee Jack Ciattarelli has talked up attracting more data centers to the state while pledging to withdraw New Jersey from a regional initiative to curb greenhouse gases and criticizing Democratic-led clean energy policies in the state. He’s pointed to Pennsylvania as an example to follow.
“Pennsylvania has the juice, we don’t,” he posted on X. “And when I say juice, I’m not just talking about the right kind of leadership. I’m talking about something as basic as electricity. The kind that’s needed to keep our monthly electric bills down AND power the data centers that support AI, which is a phenomenal economic development opportunity.”
Bringing energy policies into focus
More broadly, Republicans and industry leaders have pointed to state-level clean energy policies enacted within the last decade as a significant — or bigger — driver of energy bill increases than data center power use. Even some Democrats acknowledged that the advent of AI data centers and their massive power requirements have complicated energy policies passed just a few years ago.
“In Virginia, affordable electric bills are on the ballot, because bad policies adopted in 2020 are driving increasing bills for the state’s largest utility,” Justin Discigil, spokesman for Youngkin’s Spirit of Virginia PAC, said in a statement. He criticized Spanberger for supporting the Virginia Clean Economy Act, which was enacted in 2020, and for pledging to rejoin the Regional Greenhouse Gas Initiative, from which Youngkin took steps to withdraw Virginia.
Virginia state Del. Ian Lovejoy, Republican, said the data center angle to electricity bill hikes is “a chief concern in my district,” adding the growth of the data center industry in his state necessitates having “to crack open the [Virginia] Clean Economy Act.”
“You just cannot build enough solar and wind to power the state under the current trajectory,” he said. “And we’re going to have to come up with a way for data centers to bear more of the cost of this infrastructure that they’re requiring.”
The Trump administration has shuttered some renewable energy projects, while disincentivizing others, in its bid to lean harder on fossil fuels, which Democrats and others have pointed to as exacerbating rising energy costs. The White House did not respond to a request for comment.
Simonds, a member of the Natural Resources Committee in the Virginia House, said she’s blown away by how data centers “have dominated every environmental issue we have.”
“We had some really ambitious goals for moving toward a clean economy,” she said. “But the amount of energy these data centers require have just blown all of our best laid plans right out of the water.”
She said Virginia shows voters are connecting the rising cost of their energy bills with data center growth.
“There’s another part of the story around the need to modernize the grid and do upgrades to infrastructure,” she said. “But data centers have started to become the villain in the eyes of consumers, and they are really concerned about building a bunch of new power plants to fuel the AI explosion around the world.”
