Data centers impacting consumption? AI influencing the outcome of U.S. elections, and the reason is: electricity prices!

```

The surge in electricity prices caused by the data center boom is becoming a heavy burden for American consumers and businesses, and is rapidly evolving into a key political issue. From the gubernatorial race in New Jersey to the battle for congressional seats in Virginia, the rising cost of electricity is reshaping voter intentions.

According to data from the U.S. Energy Information Administration (EIA), between January and September of this year, U.S. residential electricity prices have increased by about 10% in total. The areas with the highest increases are mostly Democrat-led; according to a Goldman Sachs report, states such as Maryland, Delaware, and California have seen electricity prices rise by up to 29% over the past three years.

Electricity prices, interwoven with food prices and other inflation factors, continuously challenge the financial resilience of American households. The National Energy Assistance Directors Association predicts that in 2024, the number of users whose power is cut off due to overdue electricity bills may rise to 4 million, compared to 3.5 million last year and 3 million in 2023—a significant increase.

Meanwhile, Republicans are trying to capitalize on voter dissatisfaction with soaring power bills to break Democratic political dominance in certain districts during the midterm elections, directly targeting the green energy policies promoted by Democrats. Ashley Koning, director of the Eagleton Center for Public Interest Polling at Rutgers University, noted, "This utility rate crisis has, to some extent, awakened each campaign camp."

Surging Data Center Demand Drives Up Power Costs

After decades of stagnation, U.S. electricity demand is growing for the first time, and a major driver behind this growth is data centers powering artificial intelligence.

According to estimates from the International Energy Agency (IEA), by 2030, data center electricity consumption will double, with the load growth in some regions of the U.S. entirely driven by AI-related computing demand. This means that the power grid’s capacity in particular regions is being quickly maxed out, especially in areas like Virginia, Pennsylvania, and New Jersey, which are managed by the U.S.’s largest power grid, PJM Interconnection.

According to data from the U.S. Energy Information Administration, New Jersey’s retail electricity price in August rose 19% year-on-year, leading the national average increase of 6%.

“AI computation isn’t ‘optional consumption’; it almost runs around the clock,” pointed out Meredith Fowlie, an energy economist at UC Berkeley. “The rigidity of power demand leaves little room for price adjustment.”

An October report from the American Bankers Association also warned: “Peak capacity pressures from electricity demand may persist, meaning customers’ electricity bills will continue to be under constant pressure.” The report notes the impact will disproportionately affect low-income households.

Democrat-led Areas Hit Hardest; “Green Policies” Worsen Supply Shortage

The latest report from Goldman Sachs analyst Carly Davenport shows that the states with the highest electricity price increases are mainly concentrated in the Northeast and Mid-Atlantic, areas mostly led by Democrats.

Over the past three years, the states with a cumulative electricity inflation of up to 29% (such as Maryland, Connecticut, Delaware, Washington, D.C., and California) mostly have deregulated or competitive electricity markets; whereas states with slower electricity price growth (such as Michigan, North Dakota, Arkansas, South Dakota, and Louisiana) tend to have traditionally regulated markets.

Maryland legislator Brian Chisholm criticized: “Politicians and special interest groups have traded energy independence for delusional climate cult ideologies, and every Maryland family is paying the price for soaring bills and rapidly dwindling energy supplies.”

Republicans have targeted the aggressive green energy policies of Democrat-led states, arguing that prematurely retiring reliable fossil fuel power plants in favor of unstable solar and wind power has systematically weakened the reliability of regional power grids.

Maine illustrates how infrastructure upgrade costs can push up electricity prices. In August, the state’s retail electricity price jumped 23% year-on-year, partly due to recent winter storm-related repair costs for damaged power lines. Central Maine Power, the largest utility, is seeking regulatory approval to further raise electricity rates over the next five years to improve the grid’s resilience.

Political Consequences Already Emerging

The electricity price crisis has become a major topic in the U.S. midterm elections, occupying center stage, especially in the New Jersey gubernatorial race.

In New Jersey, Republican candidate Ciattarelli has pledged to withdraw from the regional carbon reduction plan to lower electricity prices, while Democratic candidate and Representative Mikie Sherrill has proposed declaring a utility cost emergency, freezing rates, and seeking cost-reduction measures.

Virginia Democratic gubernatorial candidate Abigail Spanberger mentioned utility rate issues in her first campaign ad—which is no coincidence. Virginia is one of the regions with the highest concentration of data centers in the nation; with AI firms densely setting up operations, grid load and construction costs have soared, becoming a shared anxiety for local governments and voters alike.

“In this election, energy isn’t just an environmental topic, but an all-round symbol of inflation, employment, and household finances,” said Ashley Koning, director at Rutgers University's Center for Public Opinion. “Voters don’t care how advanced AI is anymore; they’re asking: why has my electricity bill doubled?”

Businesses have also been affected.

Steve McFadden, owner of a coffee shop in Collingswood, New Jersey, has been forced to raise prices due to soaring electricity bills. “We can absorb some of the costs, but after reaching the saturation point, there’s nothing more we can do.” Steve Heisman, CEO of nonprofit housing provider HABcore, said their group living facility in Asbury Park saw electricity bills of $8,075 from June to September this year, a 35% year-on-year increase.

Meredith Fowlie, an energy economist at UC Berkeley, highlighted the particularity of electricity as a necessity: “If strawberries are too expensive, I can buy apples—in other words, there are substitutes. In the long run, there simply aren’t many substitutes for electricity.”

Risk Warning and DisclaimerThe market involves risks, and investments should be made cautiously. This article does not constitute personal investment advice, nor does it take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investment decisions based on this are at your own risk. ```