Big Tech data centers are driving up power bills at America's Rust Belt factories
Data centers in the Rust Belt region are significantly increasing electricity costs for manufacturing companies like Belden Brick in Sugarcreek, Ohio, primarily due to soaring capacity charges. Federal, state, and local governments are considering new regulations and charges for tech companies, but manufacturers worry these proposals could inadvertently harm their operations. This situation is pushing factories to consider price hikes, operational changes, or relocation.
Manufacturers across the American Rust Belt, including the Belden Brick Company in Sugarcreek, Ohio, and Plaskolite with facilities in Pennsylvania and Ohio, are facing dramatic increases in electricity bills, primarily driven by the surging power demands of data centers. Belden Brick reported a 90% increase in electricity costs last year, with its monthly capacity charge jumping from $1,600 to $12,000, according to company president Brad Belden.
The 13-state region covered by grid operator PJM Interconnection has seen capacity charges soar due to stagnant power supply and the rapid expansion of power-hungry data centers, particularly those serving the artificial intelligence industry. PJM's capacity prices increased over 1,000% from 2024 to the current year, leading to industrial electricity price hikes of 31% in Pennsylvania and 26% in Ohio over 12 months, significantly higher than the national average. Despite these increases, PJM recently had to take emergency measures to prevent blackouts during peak demand.
In response to these issues, federal, state, and local governments are proposing new regulations. The Federal Energy Regulatory Commission (FERC) is considering requiring companies with onsite power generation to pay transmission charges for that capacity, and at least ten U.S. states have pending rules to manage data center electricity demand. However, manufacturing advocates, such as Paul Cicio, president of the Industrial Energy Consumers of America, are concerned that these proposals may unfairly impact factories, which are often classified in the same electricity-rate class as data centers. Manufacturers are appealing for exemptions and urging regulators, like those in Ohio, to more accurately estimate data center demand, with some considering onsite power generation or shifting operations to off-peak hours to manage costs.