Are your Electricity Bills suddenly higher? New report says AI could be to blame — Here’s why

As electricity bills continue to rise across the United States, many consumers are asking an increasingly urgent question: Is AI responsible for the surge in utility costs? Recent reports suggest the answer is partly yes, alongside traditional factors like inflation and climate-related infrastructure damage, as per a report by USA Today.

Rising Utility Costs: The Numbers Speak

Household utility expenses have surged sharply over the past five years. A September analysis by J.D. Power shows that electricity, gas, and water costs increased by 41% between 2020 and 2025, significantly outpacing overall inflation of roughly 24% over the same period, according to Bankrate.

On average, American households are now paying $184 a month for electricity, $141 for gas, and $99 for water, marking an increase of $122 per month since 2020. The rise in utility bills is not isolated; more than 40 states are experiencing higher rates, and experts warn that further hikes are expected in 2026.

Notable examples include:

• Southern California Edison plans a 19% rate increase for five million customers, adding $33 per household cumulatively by 2028.
  
• Consolidated Edison seeks a 13% increase in New York in 2026, raising average bills by $26.60.
  
• Spire Inc. raised rates 15% in Missouri in October, adding $14 to monthly bills.
  

Why Are Electric Bills Climbing?

Two primary trends are cited for rising electricity bills, as mentioned in a report by USA Today :

1. Climate Change and Infrastructure Costs
Extreme weather events, including floods, fires, hurricanes, and blizzards, have become more frequent due to global warming. These disasters damage the power grid, forcing utility companies to spend billions on repairs and upgrades. “When you have these natural disasters, rates increase,” said Ramah Vaughn, director of utilities intelligence at J.D. Power. “There’s a sense of frustration because consumers feel they are paying more without receiving better service.”

2. The AI Factor
Less obvious but increasingly significant is the surge in electricity demand driven by AI and associated data centers. Todd Snitchler, president of the Electric Power Supply Association, explains that data centers have expanded rapidly to support AI operations, from large-scale Google searches to AI-driven applications.

Lucero Marquez, associate director for federal climate policy at the Center for American Progress, said, “With AI and data centers, growth is on a sharper trajectory than anything else we’ve seen recently. That is a major catalyst for higher monthly bills, and there’s no end in sight.”

Data centers strain the aging U.S. electric grid, compelling utilities to invest in upgrades, which are then passed on to residential consumers. The Edison Electric Institute reports that $1.1 trillion is projected to be spent on energy grid upgrades between 2025 and 2029.

Additionally, a national shortage of transformers, compounded by import restrictions, is increasing infrastructure costs further.

Other Factors Affecting Your Electricity Bill

Beyond AI and climate change, several other elements contribute to rising bills, according to the USA Today report:

• State-Level Clean Energy Mandates: While clean energy reduces fossil fuel reliance, initial infrastructure costs can elevate bills.
  
• Inflation: General cost increases in goods and services impact the energy sector, further pushing up rates.
  
• Outages and Aging Grid: Despite higher bills, service improvements are limited, with outages becoming more common.
  

Impact on Households

Rising electricity costs are straining household budgets, particularly among low-income families. According to J.D. Power, monthly utility expenses now consume 6.3% of the typical household’s income, up from 4.5% in 2020.

A survey by Payless Power found that two-fifths of low-income households faced overdue electric bills in the past year, with one in three receiving shutoff notices. Brandon Young, CEO of Payless Power, highlighted the consequences: “Families are skipping medication, falling behind on rent, or going without phone service just to keep the power on.”

How to Mitigate Rising Electricity Bills

Experts suggest some practical steps to reduce household electricity consumption:

1. Upgrade to energy-efficient appliances such as LED bulbs and inverter ACs.
   
2. Unplug idle devices and avoid phantom power drain from electronics.
   
3. Use smart thermostats to optimise heating and cooling.
   
4. Shift energy-intensive tasks like laundry to off-peak hours.
   
5. Monitor usage through apps or smart meters to identify spikes caused by high-consumption activities, including AI-assisted devices.

FAQs

Is AI really responsible for higher electricity bills?

Yes, AI data centers consume large amounts of electricity, contributing to higher overall demand and subsequent increases in household bills.

What other factors are driving up electricity costs?

Inflation, climate change-induced grid repairs, state clean energy mandates, and aging infrastructure are key contributors.