Data centers contribute to higher prices as fat energy bills electrify local politics
Gerry Clauss is a former electrician. But he had never worried so much about paying for electricity until the power bill on his single-family home hit $422 a month.
That was over the summer, so he turned off the air conditioner, began freeze-drying bulk food purchases rather than storing them in his electric freezer, and started shutting off his lights more often.
“It’s got to the point where people will do what they gotta do to survive,” the 65-year-old from Hainesport, N.J., said.
He said he plans to vote for Republican Jack Ciattarelli in Tuesday’s election for governor, motivated in part by soaring energy costs in an open race where they have become a hot topic. Clauss agrees with Ciattarelli’s goal to quit a regional carbon-reduction program, which the former state assemblyman has pitched as a way to lower power bills—though Clauss supports clean energy.
Big power bills are overlapping with rising food prices and inflation that remains persistently above the Federal Reserve’s target, frustrating Americans. Fall weather lightens electric bills as people stop using air conditioning, but a cold winter could hike bills again for those who rely on electric heat systems.
Retail power prices in New Jersey were up 19% in August from a year earlier, the latest state-by-state data from the U.S. Energy Information Administration show, on the leading edge of a 6% nationwide increase in the same time frame. There are several driving forces, including a rapidly growing number of data centers pumping up demand in some regions. The slow addition of new power generators, retirement of old plants and costly grid upgrades are also playing a role.
The pressure on peak electricity demand capacity will likely persist, potentially meaning unyielding pressure on customer utility bills,” the Bank of America Institute said in an October report. This will hit lower-income households disproportionately, the report said.
The price on customers’ bills can vary widely around the country due to many other reasons, too, including weather-influenced demand, the cost to fuel and run power plants, pricey fixes for aging infrastructure and state regulations.
In Maine, customers have seen surging costs to help foot the bill to fix power lines damaged during winter storms in recent years, said Andrew Landry, the state’s deputy Public Advocate. The New England state’s retail prices are up 23% on the year through August.
The biggest utility there, Central Maine Power, is asking regulators for permission to increase bills more in the next five years to help further improve the grid to defend against damage, said Kimberly Harriman, deputy chief executive of parent company Avangrid. She said spending more now will ultimately save customers over the long run by lowering the likelihood of outages and costly repairs.
Democratic Gov. Janet Mills has said the rate increase will add another cost burden for vulnerable people. Proposed rate increases are also facing opposition in places such as Minnesota, where rates haven’t significantly risen in the last year, but could: A big utility there is seeking a 10% increase through 2026 for several stated reasons, including upgrades to boost reliability and preparation for rising power use.
Surging prices have become a big factor in New Jersey’s governor’s race, where Ciattarelli is running against U.S. Rep. Mikie Sherrill, a Democrat. At a debate in October, she called for a state of emergency on utility costs to allow her to freeze rates in place while pursuing cost-reducing measures.
“This utility rate crisis is kind of the issue that woke up the campaigns,” said Ashley Koning, director of the Eagleton Center for Public Interest Polling at Rutgers University.
Price increases are hitting businesses, too. Steve McFadden, owner of a coffee shop in Collingswood, N.J., said he has had to raise prices because of surging power costs. “We can absorb some of it, but then it hits a saturation point,” he said, adding that he had submitted his mail ballot for Sherrill with the issue in mind.
In the past year and a half, businesses looking for office space in southern New Jersey have increasingly asked about their exposure to higher electric bills, and more are opting for fixed energy contracts to keep prices stable, said Andrew Koller, a research analyst at Wolf Commercial Real Estate, a regional real-estate firm.
HABcore, an affordable-housing provider in New Jersey, has seen rising electricity costs hit low-income residents who pay their own utilities in subsidized units, said Chief Executive Steve Heisman. The nonprofit is also feeling the pinch: Its group-living home in Asbury Park, which houses 30 people, saw electricity costs total $8,075 between June and September, up 35% from the same period last year.
Accountant David Healey said he had never budgeted for electricity until the power bill on his three-bedroom New Jersey house hit $550 by July.
“It’s the difference between groceries or medicine or keeping the lights on,” the 38-year-old in southern New Jersey said. Wanting to keep costs under control this winter, he just installed solar panels.