Data centers need power – lower income, rural residents pay the price

Cornell researchers examined data-center growth and power infrastructure across four major U.S. grids from 2020 to 2025, using information on 4,000 existing and proposed facilities, electricity prices, utility filings, transmission plans, and household and employment data. They find that data centers drove much of the rise in transmission investment, from $2 billion in 2020 to $34 billion in 2025. In 2025, data centers paid only 38% of the $8.25 billion in infrastructure costs associated with their growth; households bore the remaining $5.13 billion. The study argues that existing cost-allocation rules, which often rely on past electricity use, fail to charge new large consumers for the infrastructure built to serve them.

The burden falls especially hard on rural and lower-income residents, whose energy bills can consume a greater share of household income even though rural residents report less AI use. Data-center expansion raised wholesale electricity prices by nearly 10% or more in some hubs, including 15% in Virginia and 20% in the southern Bay Area; neighboring states can also help pay for upgrades. The researchers note that data centers bring economic benefits, including jobs, and that returns on state incentives vary, with workforce availability a stronger indicator of gains than incentive spending. They recommend charging facilities in proportion to the demand they add, directing aid to low-income households, and linking tax incentives to jobs and wages. Shifting data-center operations away from a region’s 22 annual peak-demand hours could also ease grid strain and reduce the need for expansion.