By Paul Steidler, in RealClearEnergy

Several major electric utilities have recently announced that their residential customers will have lower electric bills because of major investments in new power plants and the electric grid, enabled by data centers.

Data centers generally need electricity 24/7 and are willing to pay whatever is necessary to ensure reliable power is always available. That enables more plants to be built and revitalizes our aging transmission grid.

On May 27, the Georgia Public Service Commission (PSC) approved a plan to lower rates by approximately $50 per year for the typical residential customer. Total annual savings will be approximately $285 million.

This follows the Georgia PSC’s adoption of a measure in January 2025 that allows for large customers, i.e., data centers, to “be billed using terms and conditions beyond those used for standard customers to address risks associated with these large load users.” It allows contract lengths of up to 15 years and ensures data centers will pay for “upstream generation, transmission, and distribution.”

On March 5, Entergy announced, “approximately $5 billion in total savings for 2.3 million customers in Arkansas, Louisiana, and Mississippi because of data center customer agreements in those states.” The savings are over the next 20 years.

Entergy also said the data centers were responsible for “approximately $47 billion in total new investment for communities, thousands of high-tech jobs, millions of dollars in new tax revenues,” and many other benefits.

On February 24, American Electric Power’s Indiana Michigan Power (I&M) company announced it would be filing to reduce base rates, the largest portion of most of its 600,000 customers’ bills, this summer.

“The rate decrease is made possible by the load growth and increased revenue it is experiencing from large customers including data centers,” I&M said in the above press release. Details will be in the formal filing when it is submitted this summer.

Blaming data centers for higher electricity costs is a classic case of scapegoating and does not withstand mathematical and regulatory scrutiny, as a May 2026 study from the renowned consulting firm Energy + Environmental Economics found.

Factors such as the composition of the state’s fuel supply, the condition of its grid, and related tax and regulatory policies on electricity all affect pricing. Tried-and-true cost allocations based on well-established economic models are also difficult to follow.

According to the U.S. Energy Information Administration (EIA), the two states with the highest number of data centers, which together account for 25% of the country’s total, have lower residential electric costs than the national average. For March 2025, the latest period for which statistics are available, Virginia’s rates were 8.1% lower and Texas’s were 11.7% ower.

There has been a disturbing and abnormal historical trend for the past five years, measured through May 2026: residential electricity rates have risen faster than core prices in the Consumer Price Index (CPI). During that time, electric rates are up 40% while the CPI is up 24.5%, or 63% more than other inflation. Historically, electric rates, like computing power, fall as they become more widely used, as more than 100 years of pricing information shows.

The American public is justifiably frustrated by abnormally high electrical bills, which contribute to affordability challenges. And while data centers did not cause this, it is easy and not surprising to blame them, as their growth has significantly expanded in the past two years.

The responsible regulatory actions in Georgia, Indiana, Louisiana, Mississippi, and Arkansas show that when the proceeds of major new customers are put towards new capacity, that is, more plants and improved transmission, everyone wins, especially consumers. 

Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.