Silicon Valley may be investing billions in the AI boom, but it appears consumers are inadvertently paying for some of it.
A survey from the Bank of America Institute titled “AI Causes Rising Utility Bills” details how average utility payments rose 3.6% year-over-year in the third quarter of 2025: “Rising consumer prices for electricity and gas suggest that pressure on bills could intensify in the coming months, depending on how winter turns out.”
But beyond the problem of rising prices in the consumer sector is the growing demand for electricity generation capacity — and investments in the grid — as a whole. This need for network capacity and investment, writes BofA’s David Tinsley, is a result of building data centers to support the massive boom in artificial intelligence.
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“An important question for understanding current utility bills and how they will evolve is whether demand for energy — most obviously electricity — from the explosive growth of AI and associated data center construction is also putting pressure on residential bills?” Tinsley wrote. “BofA Global Research sees manufacturing and data centers as important drivers of electricity demand over the next 10 years. It is also worth noting that increasing residential electrification, including vehicles, is also driving up electricity demand.”
But Tinsley adds that prices are driven up by greater demand more broadly on the electrical grid: “The increase in demand for electricity from both data center development and manufacturing growth is already reflected in the rates of residential customers. The impact is spent on improvements to the transmission and distribution network necessary for the construction of the data centers, which are incorporated into the rates of all consumers (residential, commercial and industrial) in the system, and then in higher energy and capacity prices.”
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A huge amount of money from the private sector must be invested in the economy to meet the infrastructure needed to power the AI wave. Project Stargate, announced in January this year, will invest $500 billion over the next four years in building new AI infrastructure for OpenAI in the US — with founding equity partners including OpenAI itself, as well as SoftBank and MGX.
Additionally, tech giants like Microsoft, Google, Amazon, Meta, and Nvidia have invested tens of billions of dollars in building and upgrading data centers to stay ahead in the AI race and keep up with the growing demand for new products and language models (LLMs). In fact, the investment was so massive that without data centers, US GDP growth in the first half of 2025 would have been just 0.1% on an annualized basis, according to Harvard economist Jason Furman.
But the question still remains: even with the billions invested in infrastructure, when will energy supply catch up to demand?
Tinsley had some bad news for consumers: “There’s probably more upside ahead.”
“Electricity supply is still struggling to keep up with rapid increases in demand due to capital intensity and regulatory requirements to build more generation and transmission capacity,” he explained.
The economist added that periods of peak demand will continue to put upward pressure on prices, and that while solar generation and storage can help fill some gaps, they don’t offer the long-term solution needed to keep the lights on (literally) in both American homes and data centers: “At a time when low-income families are already under pressure due to slow wage growth, rising electricity and gas bills would be yet another obstacle. But more broadly, rising utility bills could be a brake on consumer discretionary spending if increases are significant and persistent.”
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