Data Centers Spark Projected $1.4T Spending Surge From Power Utilities

U.S. utilities have begun an unprecedented spending surge, largely to meet ballooning power demand from data centers. Without proper oversight, this could mean higher electric bills for consumers, according to a new report.

Electricity providers plan to spend at least $1.4T through 2030 on power plants, transmission lines and other grid infrastructure, according to a report released Tuesday by electricity consumer advocacy group PowerLines.

The spending projection, based on a review of earnings reports from 51 investor-owned utilities, marks a more than 21% increase over utilities’ five-year plan a year ago. 

A significant share of this planned spending is being undertaken to serve new data centers amid an artificial intelligence-boosted building boom. But higher utility capital expenditures often mean that higher power prices lie ahead, and that could be bad news for energy-hungry data center users and regular consumers unless there are significant reforms to how utilities are regulated, according to the report’s authors.

“Investor-owned utilities are signaling a record-breaking wave of capital spending, and history shows that those plans are often a leading indicator of future utility rate increase requests,” Charles Hua, founder and executive director of PowerLines, said in a statement. “Our century-old utility regulatory system has accelerated the size of the pie of utility capital spending, even when more cost-effective solutions that could lower consumers’ utility bills are available yet underdeployed.”

The utilities’ capex surge is happening as electric bills are already on the rise across the U.S., elevating energy affordability as a top political issue at the state and federal levels. According to PowerLines, utility bills have increased close to 40% since 2021 and continue to rise, with power providers requesting a combined $31B in rate increases from regulators in 2025 alone. 

While data centers aren't the only reason electricity demand is on the rise, AI and the stratospheric growth of the data center sector are primary drivers, according to PowerLines. On their most recent earnings calls, 31 of the 51 public utilities it analyzed cited demand from data centers as a top reason they are increasing spending.

Nine utilities expect to see more than 5 gigawatts of load growth driven specifically by data centers. 

Still, the report’s authors lay responsibility for any future rate increases not at the feet of the data center sector but with regulators and the utilities themselves.

Planned spending on grid improvements is often not necessary to handle expected load growth, they say. But utilities often pursue that route instead of cheaper — albeit often more complicated — options like grid-enhancing technologies or demand-side solutions that utilize “flexible” loads. 

The report frames data centers as a potential source of downward pressure on prices, as they give utilities a steady source of income while diluting fixed costs. But according to energy consumer advocates, these benefits will only be realized if regulators and state governments force utilities to find new solutions to meeting growing power demand that don’t involve them spending their way out of the problem at the expense of their customers. 

“Going forward, we urge regulators to demand transparent justification for these expenditures as well as a demonstration that utilities have explored lower cost options to ensure that spending is prudent, transparent, and in the interests of all customers,” Karen Onaran, president and CEO of the Electricity Consumers Resource Council, said in a statement.