AI continues to pressure power prices
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AI-related demand within the largest U.S. power grid continues to keep pushing power bills higher for the 67 million Americans served by PJM Interconnection.
Why it matters: AI-related costs such as noise, pollution and higher prices have provoked a broad public pushback against data center building that's gaining traction among local and state officials.
The latest: New York Gov. Kathy Hochul cited concerns about spiraling utility rates in imposing the country's first statewide moratorium on large-scale data center construction on Tuesday.
By the numbers: The price that generators charge PJM for keeping power ready to supply to the grid at moments of peak demand hit $325 per megawatt-day, according to auction results released Tuesday.
- That amounts to $16.4 billion in costs to be paid by ratepayers.
- Bloomberg notes that the grid's independent market monitor estimates that data centers accounted for roughly $6.3 billion of that total.
Yes, but: Costs would have been much higher if not for caps imposed after Pennsylvania Gov. Josh Shapiro launched a lawsuit in 2024 against PJM over skyrocketing prices. The suit resulted in a settlement, including price caps, which is currently $325 per megawatt day, and exactly where the auction settled.
- Without the cap, this price would have been $554.72, according to PJM.
Zoom out: PJM is the nation's largest power grid serving all or parts of 13 states and some 67 million people, including in Virginia — home of the nation's largest cluster of data centers.
What we're watching: Whether the growing pushback on AI data centers starts to worry investors, as the capex boom has supercharged corporate earnings and supported the stock market rally.
