--- title: Are Data Centers to Blame for Rising Electricity Prices? description: John Farrell argues that America's electricity monopoly model is ultimately responsible for skyrocketing energy costs. canonical: https://time.com/article/2026/11/09/are-data-centers-to-blame-for-rising-electricity-prices-/ author: John Farrell article:opinion: true article:content_tier: free article:published_time: 2026-11-09T20:46:25.053Z article:modified_time: 2026-11-09T20:46:37.539Z article:section: Ideas og:title: Are Data Centers to Blame for Rising Electricity Prices? og:description: John Farrell argues that America's electricity monopoly model is ultimately responsible for skyrocketing energy costs. og:url: https://time.com/article/2026/11/09/are-data-centers-to-blame-for-rising-electricity-prices-/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt1f60fb3caa6fbf06/6af230f263734c2405c91e31/Rising-Enegy-Costs.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 2117 og:image:height: 1191 og:image:alt: Rising-Enegy-Costs.jpg og:type: article twitter:card: summary_large_image twitter:title: Are Data Centers to Blame for Rising Electricity Prices? twitter:description: John Farrell argues that America's electricity monopoly model is ultimately responsible for skyrocketing energy costs. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt1f60fb3caa6fbf06/6af230f263734c2405c91e31/Rising-Enegy-Costs.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  IDEAS Time ideas # Are Data Centers to Blame for Rising Electricity Prices? > Sponsored content. 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A paid TIME subscription is separate and available at time.com/subscribe-agent. ### Sources * TIME Newsletters: [time.com/newsletters](/c/time-nl-inside-2026q3/newsletters?i=8ab2525a-0f12-4d12-a16c-e13aad89e06e&cr=time-nl-inside-2026q3-v1) by [John Farrell](https://time.com/author/john-farrell/) ## John Farrell John Farrell is a co-director of the Institute for Local Self-Reliance and directs the Energy Democracy Initiative. Nov 9, 2026 8:46 PM UTC  mammuth—Getty Images by [John Farrell](https://time.com/author/john-farrell/) ## John Farrell John Farrell is a co-director of the Institute for Local Self-Reliance and directs the Energy Democracy Initiative. Nov 9, 2026 8:46 PM UTC Listen 00:001.0x07:38 Narrated by TIME AI. The [data center debate](https://time.com/article/2026/10/21/how-america-s-ai-trust-issues-could-impact-the-midterms/) rages [nationwide](https://time.com/article/2026/11/04/midterm-elections-results-ai-industry-data-centers/), and it often centers on one question: How much are data centers driving up electric bills? But most Americans would be surprised to learn that their bills will keep climbing—even if no new hyperscaler data centers ever show up. And that raises an even more revealing question: Why is the U.S. still running its economy on a 100-year-old utility model built for the early 1900s? Using this antiquated electricity delivery system in the modern era has large and widespread consequences. Electricity rates have risen [30%](https://www.eia.gov/electricity/monthly/epm%5Ftable%5Fgrapher.php?t=table%5F5%5F03) in the past five years, and the typical American household pays an extra [$300](https://ilsr.org/energy/utility-bill-calculator/) annually. Utilities in at least eight states are preemptively shutting off electricity service. And some states are responding to threats of catastrophic wildfires often sparked by their own utility equipment. Meanwhile, obsolete utility approaches to meet forecast hyperscaler data center demand threaten even higher costs for ordinary ratepayers. As a country, we should commit to adopting and linking new technologies like solar and battery storage, giving individuals and communities more control over power production and supply, and offering the cheapest and cleanest way to meet our power needs. However, the old monopoly utility system creates powerful incentives for companies to act against the public need for clean, cheap energy and to thwart existing public oversight mechanisms. Accelerating technological improvements for local power generation and resilience further widens the gap between the outdated utility model and the opportunities of a modern electricity system. To be fair, our archaic system made sense at the time. Since the advent of electricity generation, political leaders believed in the public benefits of this essential resource and that a delivery monopoly—a single set of wires to each home or business—was prudent. Then, one after another, states struck bargains to grant for-profit companies a monopoly over electricity delivery in exchange for state oversight. This state-by-state regulatory model quickly fell short, as utilities speculated in unregulated industries and hid the costs. The collapse of large utility holding companies in the 1920s and 1930s [contributed](https://energyhistory.yale.edu/electricity-and-the-public-good-private-public-power-debates-in-the-1920s-30s/) to the Great Depression, [demanding](https://storage.googleapis.com/jnl-bcls-j-bclr-files/journals/1/articles/2439/63e3a3da9b94c.pdf) new federal rules. In 1935, the Public Utilities Holding Company Act made several changes meant to curb utility industry excesses, including breaking up multi-utility holding companies and setting guidelines to prevent a recurrence of mergers that threatened the public interest. This revised regulatory framework held for 50 more years, but as an economic philosophy of “[bigger is better](https://time.com/3062887/why-big-mergers-are-bad-for-consumers/)” took hold in our national politics in the 80s and 90s, the fervor of market consolidation swept up the utility industry, too. From the mid-90s to 2015, mergers shrank the number of investor-owned utilities by almost half, even as electricity use rose [20%](https://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf). The death knell of market competition came in 2005, when Congress [repealed](https://www.federalregister.gov/documents/2005/12/20/05-24116/repeal-of-the-public-utility-holding-company-act-of-1935-and-enactment-of-the-public-utility-holding) key provisions of its 1935 legislation and lifted a ban on utility political contributions, sharply reducing federal oversight and dramatically increasing political influence. Fewer and larger utility companies have meant more power for shareholders and poorer service for consumers. Utilities have only reinforced that power by crushing potential competitors. They’ve used loopholes in infrastructure planning rules to build pet projects that effectively excluded new entrants. They’ve [lobbied](https://news.bloomberglaw.com/environment-and-energy/lobbying-clash-intensifies-over-utilities-right-to-build-grid) states for "right of first refusal" laws to get first dibs on owning new poles and wires. They’ve added layers of detailed and time-consuming review and high fees to the grid connection process for new solar arrays and batteries. They’ve also aggressively [lobbied](https://www.nytimes.com/2017/07/08/climate/rooftop-solar-panels-tax-credits-utility-companies-lobbying.html) to reduce the energy savings consumers earn from rooftop solar projects. This old and expensive utility model is increasingly at odds with remarkable technological innovations underway in the production and distribution of electricity. [Research](https://www.rewiringamerica.org/research/homegrown-energy-report-policy-affordable-household-upgrades) by Rewiring America suggests that nearly all the forecast demand from data centers could be met with residential or business clean energy assets such as solar, batteries, and heat pumps, much faster and more affordably than utility-preferred investments like large power plants and transmission lines. Similarly, community solar projects can be built in mere months and share electricity among many “subscribers” (including renters and others typically left out of rooftop solar adoption). This is why experts like myself believe that local resources can directly lower energy costs for [millions](https://www.brattle.com/the-untapped-grid/) of consumers and simultaneously make grids more resilient against climate events such as wildfires or storms. The gigawatts of rooftop solar installed by California home and business owners, for example, saved all in-state utility customers over [$2 billion](https://mcubedecon.com/wp-content/uploads/2025/02/calssa%5Frooftop-solar-reduces-costs-for-all-ratepayers-2025.pdf) in 2024 alone. Many Californians have attached batteries to their solar systems, allowing them to dispatch power into the state’s grid in periods of sky-high wholesale prices, lowering costs for everyone. But the state’s big three investor-owned utilities have only complaints, because those consumer savings from consumer investments don’t result in big shareholder profits. We can prevent data centers—or the next big energy demand—from spiking energy bills, but it requires acknowledging two fundamental truths. First, the costly failures of today’s grid lie in the overbroad monopoly powers that pit for-profit grid operators against the entrepreneurs and customers who can generate and manage clean electricity for themselves and others. Utilities can only block rooftop solar, for example, because they have a publicly granted monopoly over the poles and wires to which the arrays connect. Second, only breaking up for-profit utilities and removing the profit motive from electricity delivery can end the perverse incentives that drive for-profit utilities to abuse their market and political power. If we make local electricity distribution a public service, restructured utilities will profit only when they provide a valuable service, not just build a thing. Their proposed power solutions for AI data centers (or anything else) should have to prove as cost-effective as the energy provided by independent producers or networks of customers deploying local solar, batteries, and heat pumps. Like the federal government’s breakup of AT&T fifty years ago, separating the public function of running the network from the competitive function of supplying services (telephones and modems in the AT&T case, local solar electricity in the utility case) can unleash lower costs and innovations –– such as the original fiber optic network that birthed the modern Internet. The electricity monopoly model has failed, unable to reconcile central planning and private profits with electricity democracy enabled by modern technology. We can restructure our utility system to tap the best resources from fair and open markets run by accountable grid operators, if we break up the monopoly corporations that stand in the way. Putting the public back in charge would allow us to build a cleaner, more efficient, and resilient grid, better able to meet the challenges of the modern economy, and make good on the promise of this public service that Americans can depend on. [TIME Ideas](https://www.time.com/ideas) hosts the world's leading voices, providing commentary on events in news, society, and culture. We welcome outside contributions. 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