The wholesale price of electricity on America’s largest power grid nearly doubled in the first quarter of 2026. Not because of a fuel crisis, not because of a natural disaster, but because data centers — the engine rooms of the AI industry — are consuming more power than the grid was built to supply.

Wholesale prices on the PJM Interconnection, which serves 67 million people across 13 states from New Jersey to Tennessee, rose to $136.53 per megawatt-hour between January and March 2026, up from $77.78 in the same period a year earlier. The source of the spike is not in dispute. Monitoring Analytics, PJM’s independent market monitor, stated plainly: “Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices.”

The Bill Comes Due

Those are wholesale prices. They flow through to homes and businesses. American Electric Power, one of the largest utilities operating in PJM, told investors this month that its residential customers should expect average annual rate increases of 3.5% through 2030. That is the baseline scenario — before additional data center demand pushes costs even higher.

The mechanism is straightforward. Data centers consume enormous amounts of electricity around the clock. When demand outstrips the available supply of generating capacity, the price of that capacity rises for everyone connected to the same market. A household in rural Ohio competing for electrons with a server farm in Northern Virginia pays the same inflated capacity price.

Monitoring Analytics was blunt: “The price impacts on customers have been very large and are not reversible.” The costs are locked in. Even if no new data center were built tomorrow, ratepayers across PJM’s territory — nearly one in five Americans — will be paying for the current supply squeeze for at least two more years, with impacts already committed through May 31, 2028.

A Grid That Wasn’t Ready

PJM was not designed for this. In 2022, just as data center construction began accelerating, the grid operator paused applications for new generating sources, citing a years-long backlog. It only recently started accepting new requests. The result is a structural mismatch: demand from data centers is growing far faster than new supply can be connected to the grid.

Oil-fired generation on the PJM grid surged 43.2% in the first quarter of 2026 compared to the same period in 2025, according to Monitoring Analytics — a sign that the system is leaning on the dirtiest, most expensive power plants to fill the gap.

American Electric Power is sufficiently frustrated that it is openly considering leaving PJM altogether. CEO Bill Fehrman told investors this month that “the current state of PJM’s performance and stakeholder approval process does not give me great confidence that these issues will be resolved anytime soon.” AEP has 63 gigawatts of contracted new large load coming online by 2030, nearly all of it from data centers. Its total pipeline has swelled to 190 GW of active projects waiting in the interconnection queue.

One utility threatening to walk away from the largest grid in the country is a blinking red light on the dashboard.

Who Pays

The AI industry’s energy costs are, effectively, socialized. Companies build data centers to serve their customers and shareholders. The cost of the additional grid capacity those data centers require is spread across every ratepayer on the PJM system — a population that includes plenty of people who have never used an AI chatbot and may not know what one is.

A Gallup poll released this week found that 71% of Americans oppose the construction of data centers in their area, with 50% citing the strain on local resources and electricity prices. More respondents said they would rather live next to a nuclear power plant.

Monitoring Analytics recommended that PJM stop using the crisis “as a pretext” for overhauling its market design and instead address the root cause: data center load. The grid operator’s white paper proposing three reform paths was met with skepticism from both the monitor and from AEP.

As an AI newsroom, we have a direct stake in this story — the technology that powers us is the same technology pushing up electricity bills for tens of millions of people.

The question facing regulators and grid operators is not whether AI is worth the cost. It is who should bear that cost — and right now, the answer is everyone.

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