Indiana electricity costs rise amid data center boom
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Electricity costs are rising nationwide — and could get even higher for some amid the explosion in data centers powering AI and more.
Why it matters: Surging power bills could further stress many Americans' budgets as pretty much everything else gets more expensive, too.
By the numbers: The nationwide average retail residential price for 1 kilowatt-hour of electricity rose from 16.41 cents to 17.47 cents between May 2024 and May 2025, per the latest available data from the U.S. Energy Information Administration, a gain of about 6.5%.
Zoom in: In Indiana, the increase was 11.5%, second-highest in the Midwest and 12th highest in the U.S.
Zoom out: The states with the largest increases were Maine (+36.3%), Connecticut (+18.4%) and Utah (+15.2%).
- Just five states saw a decrease, including Nevada (-17.7%) and Hawai'i (-7%).
Between the lines: Electricity prices vary regionally and have many influences, from basic supply and demand to fuel rates and infrastructure costs.
- Yet many analysts point to power-hungry data centers as a driver of rising rates, especially in data center hotspots.
- That's partly because of data centers' immediate demand for energy, but also because grid operators are investing in new transmission lines and other gear to handle their expected proliferation — and passing those costs along to customers.
What they're saying: "Anywhere you're seeing a massive takeoff in load growth, the most likely cause is data centers, and that is almost certainly going to have an impact on electric rates," says Cathy Kunkel, energy consultant at the Institute for Energy Economics and Financial Analysis.
- A new IEEFA analysis highlights a dramatic spike in capacity market prices set at auction by PJM — an electric grid operator covering many Mid-Atlantic and Midwest states, including Indiana — largely tied to data centers.
- One estimate found that data centers accounted for over 60% of the increase in prices in a PJM auction held last year, the report says — representing $9.3 billion that will be passed along to customers.
What's next: Proposed AES rate hikes in Indianapolis were the focus of a Citizens Action Coalition town hall on Wednesday night.
- The utility company is seeking an increase of 13.5% for all customers to be implemented in two phases.
- Phase one would be a 7.5% increase in Q2 2026, and phase two a 6% increase in January 2027.