US Electricity Prices Up 18%; Data Centers Contribute to Grid Strain
Donald Trump's campaign promise to halve electricity prices within 18 months failed, with residential rates rising by 18%. Data center growth, combined with power plant closures, is identified as a major factor contributing to unprecedented load growth and rising costs across the US. In response, states like New York have enacted moratoriums on data center development, while other states consider alternative regulatory approaches.
Donald Trump's campaign pledge to reduce electricity prices by 50 percent within 18 months of taking office has fallen short, with residential electricity rates increasing by 18 percent since January 2025, according to the Energy Information Administration. Prices rose 7.3 percent from April 2025 to April 2026, roughly double the inflation rate.
Experts attribute the rising costs and grid reliability concerns to several factors, including the unprecedented load growth from the data center boom, coupled with the closure of coal and natural gas power plants. PJM Interconnection, the nation's largest grid operator, recently announced a record-tying $16.4 billion annual capacity auction, locking customers into historically high rates for the 2028–2029 delivery year. Data centers alone contributed an additional $6 billion to PJM's auction costs.
While federal policies set rules for interstate transmission, retail rates are largely influenced by state regulations, fuel prices, and local infrastructure costs. Trump's trade policies, which increased import taxes on critical components like transformers and electrical steel, also contributed to higher input costs for grid upgrades. Additionally, his administration's actions to block offshore wind leasing and pay developers to abandon projects in New York and North Carolina have been criticized for removing potential downward pressure on energy prices.
Amid growing public opposition to data centers, states are implementing regulations. New York Governor Kathy Hochul issued the nation's first data center moratorium, following Maine's vetoed proposal for a similar ban. Alternative solutions include Trump's Ratepayer Protection Pledge, which requires developers to front infrastructure costs, and the Consumer Regulated Electricity (CRE) model, adopted in part by New Hampshire, allowing large-load customers like data centers to connect directly to unregulated power plants. Senator Tom Cotton (R–Ark.) also introduced a bill to facilitate direct data center connections to power plants.