(Note: For a variety of reasons, I am moving my weekly E/lectrify post to Monday mornings — a great way to start your week!)
I am going to begin this piece with belated apologies to James Meier, who was my editor at The Desert Sun in the mid 2000s and 2010s and put up with me while I was creating an energy beat at the paper.
First, I created the beat by basically refusing to write about anything else, and second, not only was I constitutionally incapable of filing on deadline or writing short, but I was always trying to explain the reasons for the aforementioned shortcomings.
What I was learning about energy is that it is complicated. Almost any story I wrote involved interviewing a number of people — utility executives, solar developers and installers, environmental and consumer advocates, local and state officials and other experts — and getting them to explain things to me in plain language.
Which I would then try to explain to James, while standing at his desk and gesturing wildly. James would look up from whatever he was typing and ask one question: “How will this affect our readers’ utility bills?”
And then I’d go off and write a long story, filed after deadline, with maybe one or two paragraphs about the topic’s impacts on electric bills.
It was frustrating then — and feels even more so now — that the complex technology, economics and politics surrounding the U.S. energy transition were being reduced to a dollars-and-cents line on a monthly electric bill.
What was true then is even truer now — high electric bills cannot be explained or solved as a self-contained problem with a single, simple cause. They should not be the focus of the story. Rather, they are a symptom of our broken electric power system and the tangle of economic and political interests now inextricable from it.
It is still and even more complicated. A single, quick fix is not possible. Solutions will be messy, multiple and uncomfortable for some, and higher electric bills are most likely unavoidable – period.
Now why this is on my mind is that I have been at a number of industry conferences recently where, of course, affordability was a major focus for a range of speakers and panel discussions, most of which seemed to share a couple of basic assumptions.
Data centers are the problem and need to provide their own power, including poles, wires, substations and any other needed equipment.
To ensure reliable, affordable power, we need to build a lot of new natural gas plants and get them connected to the grid as quickly as possible.
PJM Interconnection, the regional grid operator most visibly struggling with affordability and reliability challenges, has become the case study for how these assumptions could play out in the real world. PJM provides critical power supplies for the District of Columbia and 13 Mid-Atlantic and Midwestern states, including Virginia.
The booming demand from that state’s hundreds of data centers combined with PJM’s historically conservative policies and backlogged pipeline of projects waiting to get online have been a trigger for higher prices and concerns about future blackouts.
Both federal and state officials have become somewhat obsessed with “fixing” PJM — via price caps and fast-track permitting for new natural gas and nuclear plants — as if fixing this one malfunctioning part of the system will solve all the industry’s other problems.
Speaking at the National Association of Regulatory Utility Commissioners’ Winter Policy Summit on Feb. 10 in D.C, Laura Swett, chair of the Federal Energy Regulatory Commission, flatly declared that natural gas is “the answer” to the system’s current woes.
‘A different type of customer’
Yes, I am oversimplifying, but that is what I was hearing — the narrative the industry seems to be telling itself and others — which is why I wanted to dig into things here. Affordability has become a hot political issue and almost certainly will be a defining one for the midterm elections, with initial primaries already underway.
Voter anxiety and dissatisfaction appear to be widespread, which is why a clear understanding of affordability is critical.
First, data centers are not the problem; rather the speed and scale of demand growth from data centers, electrification and manufacturing have exposed the considerable weaknesses of our electric power system.
These are well-known: We have an aging 20th-century system — both its technology and regulatory and business structures — which is being overwhelmed by 21st-century challenges that no one could have imagined or planned for.
Let’s start with a primary driver of demand growth: our own dependence on — or addiction to — digital technology, which of course has been aggressively promoted by high tech giants like Google, Meta and Amazon. According to Josh Levi, president and CEO of the Data Center Coalition, a trade association, “Two-thirds of the global population is online now; 40% of those folks were not online prior to 2018. …
“Right now, an average household has 21 devices connected to the internet, generating data,” Levi told the audience at the Electric Power Supply Association’s Competitive Power Summit on March 3, in D.C. “That's going to include the vacuums and … the thermostats and the iPads and the watches and computers. … We are generating data 24/7; we're accessing data; everybody wants to be able to connect [in] cars and trains and planes.”
The resulting demand growth has created a “moment of scarcity,” said Kelsey Bagot, chair of the Virginia State Corporation Commission, on the same panel as Levi. “We're at this moment of scarcity on the power side, and you have this entirely new – I mean, they're fundamentally a different type of customer than you’ve ever seen, even compared to like the large manufacturing customers or the Walmarts of the world. …
“These data centers, the amount of wealth and money and influence and power that they have … when we're in a moment of scarcity [and] our residential customers are competing for that power with these entities — [it is] at odds with our whole concept of utility regulation,” Bagot said.
Perverse incentives
BYOP — a mandate for data centers to “bring your own power” — is the quick fix an increasing number of states are adopting, with President Donald Trump trying to grab credit with his Ratepayer Protection Pledge, rolled out at a White House ceremony on March 4.
The RPP is an election-year ploy, capitalizing on existing trends that are already driving innovative clean energy projects. For example, Google got the jump on Trump with its Feb. 24 announcement that it will provide 1,400 megawatts of wind, 200 MW of solar and 300 MW of long-duration energy storage to power a new data center in Minnesota.
(Please note that Google and many other hyperscalers remain committed to clean energy and making good on climate pledges to cut or zero out their greenhouse gas emissions, despite Trump’s war on renewables. According to BloombergNEF, U.S. corporations signed contracts for a record 29.5 GW of clean power in 2025, with Meta, Amazon, Google and Microsoft leading the pack.)
Temporary rate freezes, as in New Jersey and Georgia, are also in the mix, again as stopgap measures.
Such quick fixes are a first step but not the solution to rising electric bills. The corporate, investor-owned utilities that provide power to 72% of Americans earn money for their shareholders by building big things — power plants, poles and wires and other infrastructure — with investments they charge back to customers through their rates.
In October of 2025, the Edison Electric Institute, the IOU trade association, reported that its members would invest $1.1 trillion in the electric power system over the next five years — the kind of capital spending that results in rate increases.
A major part of those increases is the 8% to 10% rate of return IOUs are guaranteed on their capital expenses as “public benefit” monopolies regulated by state utility commissions. The exact amount varies from state to state. (For a more detailed explanation of why IOUs can make these kinds of profits, see my Energy Literacy piece here.)
EEI’s most recent financial review noted that in 2024, its members filed 81 “rate reviews” in 34 states, which were likely requests for some kind of rate increase. At the same time, utility commissions in 32 states approved 79 rate cases, again, likely with some kind of rate increase. What if any overlap exists between cases filed and approved was not specified in the report.
The result: shareholder dividends from EEI member utilities increased by 5.5% in 2024, to a record total of $34 billion, leading all U.S. business sectors in dividend payouts (which I wrote about here).
Sen. Angus King (I-Maine) calls the business and regulatory structures behind those profits “perverse.”
“I’ve always thought the rate of return system for rewarding investment in the utility business is kind of crazy,” King said in a closing keynote at the NARUC conference on Feb. 11. “It’s like telling your architect, ‘I want you to design me a house, and you’ll get a percentage of the price of the house.’ …
“I’m not blaming the utilities because the old saying is — show me your incentives, and I’ll show you the outcome — and the incentive is to build and … build in a way that maximizes the investment in the rate base,” he said.
Show me your political priorities
King ended his speech with a call for utility commissioners to push for the changes needed to hold the line on rate increases by scrutinizing and, where appropriate, cutting the investments utilities can turn into guaranteed profit.
Behind those rate cases are real people “across the country who are facing electric bills, medical bills, heating bills. … They’re having to make some very difficult and agonizing choices,” he said. “You’re at the intersection; you’re at the place where all of this comes together.”
The same could be said of energy industry conferences, which is why I keep going to them and writing about them.
I do not in any way wish to minimize the linked challenges of demand growth and affordability, and the economic impacts they are having on American households. My concern is that politicizing high electric bills and prioritizing quick fixes for immediate relief will be used to defer or derail the long-term, systemic changes that are needed — at PJM and across the industry.
To paraphrase King, show me your political priorities — and who benefits most from them — and I’ll show you the outcome.
Is affordability being used to provide cover for utilities, which, after their temporary rate freezes, will bounce back with requests for even higher rate increases?
Will the push for fast-track permitting of new natural gas plants lock us into decades of the price volatility of fossil fuel-dependence, and the greenhouse gas emissions that will continue to drive climate change and our electric power system’s vulnerability to extreme weather?
And will fears about affordability and the national imperative to win the AI race with China displace any sense of urgency Americans might still have about climate change and the need to phase out fossil fuels?
In all likelihood, 15 years ago, neither James nor I would have even thought to ask such questions, and our readers might not have cared if we did. But the current focus on affordability has provided us all with a pivotal opportunity to ask these and other critical questions and look for new answers.
We need a clear, depoliticized understanding of how our electric power system works today and all our options for meeting future demand growth with reliable, clean power that will raise our electric bills as little as possible.
Sometimes I feel like I’m still talking to James, trying to explain why the story is so long and complicated and gesturing wildly.