Policy Brief: Have Data Centers Driven Up Electricity Prices?

U.S. electricity prices increased 27% between 2021 and 2025. Many policymakers and advocacy groups attribute rising costs to data center growth, in some cases calling for moratoriums on new construction. State-level data from the Energy Information Administration show that the assumption is unfounded, as there is no meaningful relationship between data center concentration and higher electricity prices.

• Data center heavy states do not have higher electricity prices. The 10 states with the most data centers, including Virginia, Texas, California, Illinois, and Ohio, averaged 14.46¢ per kilowatt-hour in 2025. All other states averaged 14.39¢.
• Price increases show no clear pattern regarding the presence of data centers. There is no significant difference in the rate of electricity price increases between states with high concentrations of data centers and those without.
• Increasing electricity sales are negatively correlated with electricity price increases. States that have growing electricity demand saw lower increases in electricity rates.

Electric grids carry fixed costs such as power lines, generation capacity, and long-term contracts that must be recovered regardless of consumption. When usage falls, those costs are spread across fewer kilowatt-hours, pushing prices up; when usage grows, prices stay down. States with the largest declines in electricity use saw prices rise an average of 58% over the past decade, while states with the largest gains saw prices rise just 13%.

State-level data do not support the claim that data centers are responsible for rising electricity prices. States with the highest concentrations of data centers pay no more for electricity than states with few or no data centers. Rising prices are concentrated in states where electricity consumption has declined, often a result of state energy policy.

To read more about this research and our findings view IER’s recent report Have Data Centers Driven Up Electricity Prices?  prepared by IER president Tom Pyle and IER Adjunct Fellow Daniel Simmons.