How AI Data Centers Are Driving Up Electricity Prices And What SoCal Homeowners Can Do To Avoid Rate Increases

Over the last year, something unexpected has been happening behind the scenes of America’s power grid: AI data centers are expanding faster than utilities can keep up, and the ripple effects are landing directly on residential utility bills — including right here in Southern California.

While most people see AI as a software revolution, the truth is far more physical. These facilities consume enormous amounts of electricity, and utilities are scrambling to build the extra capacity needed to power them. The cost of those upgrades doesn’t stay with the tech companies — it’s getting passed down to everyday homeowners.
(Lawrence Berkeley National Laboratory; Reuters/NERC)

And that’s where the story becomes personal.

A Sudden Surge in Energy Demand

Across the U.S., electricity demand has jumped in ways utilities haven’t seen in decades. AI servers use far more energy than traditional data centers, and new facilities are being built at record speed.

Research from Lawrence Berkeley National Laboratory shows that data centers currently consume about 4.4% of America’s electricity, and could use 6.7% to 12% by 2028 — nearly triple today’s levels.[1] Some regions near major AI hubs have already seen residential electricity costs double compared to five years ago, driven largely by wholesale price spikes.^[2]

This isn’t a distant worry. It’s happening now.

How This Affects Southern California Homeowners

SoCal isn’t home to massive AI data campuses, but we share the same grid that powers them. The California Public Utility Commission (CPUC) regulates three of the largest investor owned utilities such as PG&E, SDG&E and SoCalEdison; hiking up rates year after year to offset lawsuits and increased energy demand. When major corporate users lock in enormous blocks of low-cost electricity, utilities often shift the remaining grid upgrade costs onto residential customers.(Pew Research Center)

That’s why homeowners across the California service area have seen:

• Steady year-over-year rate increases

• Higher delivery and transmission charges

• More aggressive peak pricing

• Larger seasonal swings

• Extra pressure during wildfire and summer-demand seasons

The equation is simple: When the grid is strained, households feel it first.

Why Prices Are Rising Faster Now

Here’s what’s driving the price pressure:

• AI data centers run around the clock and require huge, constant power

• Utilities must rapidly build new power lines, substations, and transformers

• These upgrades cost billions

• Large corporations negotiate favorable long-term utility contracts

• The remaining burden shifts to families and small businesses

Several states are already seeking rate hikes specifically tied to meeting new data center demands — including projected $16–$20 monthly increases in regions like Maryland and Ohio.^[3]

Policy is slow. Bills are not.

So What Can Homeowners Actually Do?

The clearest protection from rising grid prices is to produce your own power and reduce dependence on utility electricity during expensive hours.

For California residents, the best solutions are:

1. Solar

Solar allows homeowners to replace unpredictable grid pricing with a lower, more stable rate.

2. Battery Backup

Batteries provide protection during blackouts, wildfire shutoffs, and summer peaks — while helping avoid the highest-priced time-of-use periods. For many SCE, PG&E, and SDG&E homeowners, a battery does more than provide blackout protection — it can also become a small, steady source of value. When your home produces more solar energy than you need, your battery can export that excess power back to the grid during high-demand hours. Utilities offer credits for this exported energy, reducing your bill and helping stabilize the local grid when it’s under pressure. It’s a quiet, elegant form of energy sharing: your home contributes clean power when the community needs it most, and in return, you receive financial relief on your monthly statement. Over time, these credits can offset a meaningful portion of your electricity costs while turning your home into part of the solution.

3. $0-Down Power Purchase Programs (PPAs)

This is one of the simplest ways to access clean, reliable energy without leasing, financing or buying equipment.

A Power Purchase Program:

• Requires $0 out-of-pocket for the equipment, installation, maintenance etc

• This means the power program providers are covering installation, equipment, monitoring, and maintenance for 25 years.

• The benefit for homeowners? The solar and battery storage becomes your new source of energy so that you do not have to rely on expensive grid power from the utility. Replaces your utility bill with a lower, predictable energy rate.

• Shields you from future rate hikes

• Gives you solar + battery power without being liable for battery replacement costs, maintenance, or repairs.

You don’t buy panels. You don’t buy batteries.

You simply purchase the power they generate — at a lower rate than the utility.

And this isn’t a new concept. It’s how the world’s biggest brands protect their energy budgets.

META, Google, Amazon, Apple — all rely on massive Power Purchase Agreements.

They lock in long-term clean energy at predictable pricing to defend themselves from the same volatility homeowners face — just on a far larger scale.

If Fortune 500 companies count on PPAs for stability, homeowners can too.

4. Long-Term Stability

Solar, storage, or a PPA allows families to step off the roller coaster of unpredictable grid pricing and into a future where monthly energy costs feel steady and secure.

A Local Example: Ventura County

A Ventura County homeowner recently switched to a solar + battery PPA after watching their SCE bill rise 38% over the past few seasons. They locked in a flat, predictable rate for energy, added blackout protection, and cut their summer bill nearly in half. They went from paying .40 cents a kwh to SCE with frequent blackouts to paying .20 cents a kWh. They get to use more energy, rely on their Tesla Powerwall 3's when the grid goes down and save money from day one sense they didn't have to take out a loan, lease, or pay cash for the system.

Stories like this are becoming common — because the pressure on the grid is becoming impossible to ignore.

Bottom Line

AI is reshaping almost every industry, but its energy appetite is reshaping America’s power grid even faster. That means higher bills, more volatility, and more strain on households unless families take steps to protect themselves.

California homeowners don’t have to wait for the next rate hike.

There’s a more stable, empowered way forward.

See what your home qualifies for: LEARN MORE

Sources

1. Lawrence Berkeley National Laboratory — U.S. Data Centers Expected to Consume 6.7%–12% of National Electricity by 2028
   https://newscenter.lbl.gov/2025/01/15/berkeley-lab-report-evaluates-increase-in-electricity-demand-from-data-centers/

2. Bloomberg — Electricity Costs Are Up to 267% Higher in Regions Near Data Centers
   https://www.bloomberg.com/graphics/2025-ai-data-centers-electricity-prices/

3. Pew Research Center — Residential Bills Expected to Rise $16–$20 in Several Regions Due to Data Center Demand
   https://www.pewresearch.org/short-reads/2025/10/24/what-we-know-about-energy-use-at-us-data-centers-amid-the-ai-boom/

4. Reuters — NERC Warns of Tightening Electricity Supplies Amid Data Center Growth
   https://www.reuters.com/business/energy/us-data-center-demand-raising-power-risks-this-winter-regulator-says-2025-11-18/

5. International Energy Agency (IEA) — AI and Data Centers Set to Drive Surging Electricity Demand
   https://www.iea.org/news/ai-is-set-to-drive-surging-electricity-demand-from-data-centres