As electric bills rise in the AI boom, states take aim at utilities’ profits
The artificial intelligence boom is driving up electricity bills and utility profits across the US. In response, officials and lawmakers in at least six states are challenging utility rate increases and proposing reforms to utility financing models. These actions aim to protect cash-strapped residents from rising energy costs.
The artificial intelligence boom is leading to increased electricity demands, resulting in higher utility bills and ballooning utility profits across the United States. This trend has sparked bipartisan efforts in at least six states—Arizona, Indiana, Maryland, New Jersey, New York, and Pennsylvania—where officials and lawmakers are taking significant steps to block proposed rate increases and re-evaluate utility financing models.
In Pennsylvania, Governor Josh Shapiro successfully pressured PECO, an Exelon Corp. subsidiary, to withdraw a 12.5% rate increase, criticizing the existing "20th century utility model." Similarly, Arizona Attorney General Kris Mayes is challenging two proposed 14% rate increases before the state's utility regulatory board, citing "blatant corporate greed." New Jersey's Board of Public Utilities has launched a major regulatory review to re-evaluate how utilities earn revenue, while Indiana Governor Mike Braun has appointed new utility commissioners tasked with combating rate hikes, notably challenging AES Indiana's request for a 10.1% increase. Conversely, California's Public Utilities Commission angered consumer groups by maintaining what they consider inflated profit levels for investor-owned utilities.
Consumer advocates, such as Matt Kasper of the Energy and Policy Institute and Mark Ellis, a former utility executive, argue that utility profits are at record highs, contributing significantly to rising bills. They advocate for utilities to seek lower-cost financing. However, economists like Paul Ferraro from Johns Hopkins University view these actions as political, addressing social disagreements over essential infrastructure beneficiaries rather than fundamental electricity sector challenges. Utilities defend their returns as crucial for grid maintenance and reliability, warning that lower returns could deter investors.