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Even though new and cheap solar, wind, and battery storage are coming on line, electricity bills across the country are going up. What’s to blame?
Tucked into the Appalachians in West Virginia’s southwest corner, Logan County was named for a Mingo tribal chief and became famous for its feuding Hatfields and McCoys. Today, it’s a tiny rural county with a legacy of coal mining and a population less than half of what it was in the 1950s.
Like many others across the state — and the country — Logan County residents are struggling to pay skyrocketing energy bills, and PRIDE, one of West Virginia’s Community Action Agencies, is on the front lines. Created in the 1960s as part of President Lyndon Johnson’s War on Poverty, these local agencies have programs to help residents increase energy efficiency in their homes.
In the most dire cases, PRIDE will help pay electric bills for people whose power is about to be shut off. The need for this kind of help is rising: Electric rates in the state have surged 73% in the past decade. Nationally, electric rates are up 42% since 2016.
“Probably on average, we do about 40 a month,” PRIDE’s Jordan Martin says of emergency shut-off assistance. “I’d say we probably did 25 or so a year ago.”
Spiking Prices
Why are energy prices rising so quickly? Though some people have tried to blame renewable energy, the real reasons are complicated, with some regions affected by costs from fires and storms, but regions with more renewable power are actually doing better than those without it. Most of it comes down to a two-headed monster: new electricity demand, and a creaky electrical grid that limits supply.
Some of the new demand is coming from the effort to electrify homes and vehicles to replace fossil fuels. But most of it is coming from huge new data centers being built to serve technologies like AI, which have abruptly spiked electrical demand that had been almost flat for two decades.
At the same time, the U.S. energy grid, the infrastructure that delivers electricity from power plants to your door, is poorly positioned to deliver the needed increases in juice.
“We’re riding on investments that are 100 years old,” says Mike Jacobs, a senior manager at the Union of Concerned Scientists who studies the electrical system and says we’re starting to pay an overdue bill for deferred grid maintenance. “The grid is ubiquitous, every residence in modern America has a wire going past it. … and almost all of it is past its investment lifetime. It’s ripe for upgrade or replacement.”
The problem is exacerbated by climate change: Storms and wildfires force utilities to fork over huge sums to repair the damage their shaky power lines have caused. Since the utilities pass these costs on to consumers with the blessing of regulators, “the utilities just haven’t been motivated to get smarter about this,” Jacobs says.
A Tangled Web
Upgrading the grid to meet future demand will be expensive, and the problem is aggravated by the fact that the U.S. doesn’t have just one “grid.” We have six grid regions and eight federally regulated regional transmission operators, known as RTOs, some of which are the same as the 10 Independent Service Operators, known as ISOs.
The RTOs and ISOs control the long-distance “transmission” grid in each region and must coordinate with dozens, if not hundreds, of state-regulated local utilities that actually deliver electrons to your door via the local “distribution” grid. The result is a complex tangle of conflicting rules and priorities.
The utilities just haven’t been motivated to get smarter about this.
– Mike Jacobs of the Union of Concerned Scientists, regarding grid costs and improvement
The regional grids, and even sometimes the local grids, are poorly connected, and this can result in inefficiencies. Jacobs notes that California was long an energy importer, but with the exploding popularity of solar, now has excess electrons on sunny days. But the California grid was not designed to export power, and now the state is essentially shutting down, or “curtailing,” solar power plants in times of high supply and low demand.
California is aggressively investing in battery storage and better connectivity to other regions to soak up the excess, so curtailments have gone down in the past couple of years, even as solar and wind production has increased. Utilities have also begun to charge lower “super off-peak” rates during the midday, not just the dead of night.
These efforts, Jacobs notes, are a good first step to increasing grid efficiency without expensive infrastructure upgrades. “In the old days, the utility assumed the consumers know nothing, and they don’t need to know anything, and they have no role except to pay their bill,” he says.
“That was the mindset … In fact, in some places, that’s still the mindset … because we’re dealing with an old monopoly that believed they weren’t even customers. They were called meters.”
But that’s changing, he says. “Hopefully everybody will read their electric bill enough times to realize, ‘You mean it’s, like, free if I do my laundry at noon?’”
Passing Costs to Customers
Still, upgraded power transmission, connection, renewable energy, and battery storage will be needed. And the recent political awareness around the energy used by data centers could create a new opportunity to help solve an old grid issue.
But one big cause of rising electricity prices, Jacobs discovered, is that unlike everybody else, these new data centers aren’t paying their own way onto the grid.
He explains: “If you build a cabin in the woods and you call the utility and say, ‘I built my cabin, and now can you bring a wire up this dirt road I built,’ they would say, ‘No, we’ll bring the wire along the existing road and everything up into the woods that you want, you pay for it.’ You call that a line-extension policy, and every utility’s got one, and it works just like that: You want it, you pay for it.
“You build a wind farm or solar farm, you want to connect to the grid. There’s a process for that, and every bit of that process, including the construction, you pay for … except if you’re a data center, in which case, we’ll close our eyes to all that.”
Jacobs has documented specific examples of utilities passing tens of millions of dollars in connection costs for data centers on to their ratepayers as a whole. In 2024 alone, he found $4.3 billion in connection costs passed on to consumers in just seven states, including West Virginia.
Data centers, Jacobs says, “are about as large as any city in West Virginia, in terms of their electricity use.” Utilities never thought that would happen, he adds, and their policies weren’t designed for it.
West Virginia’s problems are exacerbated by the state’s dependence on coal to generate electricity. Right across the border in Virginia, clean energy is generating savings for customers, while in West Virginia, the same utility company runs coal plants that lose money and raise prices for consumers.
In the old days, the utility assumed the consumers know nothing, and they don’t need to know anything, and they have no role except to pay their bill. That was the mindset … In fact, in some places that’s still the mindset … Because we’re dealing with an old monopoly that believed they weren’t even customers. They were called meters.
– Mike Jacobs
In southwest West Virginia, PRIDE continues to field calls from desperate electric customers. “A lot of folks, their bills are high, because they’ve used a lot of space heaters in the winter months,” Martin says. “We have a lot of folks that come in here that don’t have any income as well.”
“With everything that’s going on, you know, gas prices and rising food prices, everything is kind of just adding up,” says PRIDE’s Elizabeth Farley, who helps people weatherize and insulate their homes. “But yeah, it does seem like there’s more and more people who are having trouble paying their utility bills.”
Five Takeaways
- The electric grid, which delivers electricity from power plants to our homes, is outdated and in dire need of upgrades.
- Electricity rates are rising in many places; the combination of an outdated grid and increasing demand for electricity from data centers, like those used for AI, are a big part of the problem.
- Shifting consumer electricity-use patterns can help relieve stress on the grid by reducing demand at peak times.
- Data centers are huge users of energy, but they typically do not pay for the upgrades they require to connect to the grid.
- West Virginia is an example of what not to do: rely on coal, pass data center costs onto regular customers, and end up with a lot of people struggling to pay skyrocketing utility bills.
What You Can Do
First, try to minimize your own electricity use, especially in peak periods when demand and cost are highest. Support politicians and groups like the Union of Concerned Scientists that work to get data centers to pay their way. And support green energy, which tends to be cheaper than electricity from fossil fuels.
