Senate Dems to FERC: Prevent ‘unreasonable rate hikes’ from AI data centers

As the country grapples with soaring energy demand tied to the buildout of AI data centers, Senate Democrats are issuing a warning to the Federal Energy Regulatory Commission: make sure Americans don’t bear the cost.

In a letter led by Sen. Ed Markey of Massachusetts, the Democratic lawmakers urged FERC Chair Laura Swett to “take immediate action” to ensure consumers aren’t subject to “unjust or unreasonable rate hikes.” American households have seen skyrocketing electric bills in recent months due to artificial intelligence, cryptomining and the energy it takes to power data centers.

“These are not merely hypothetical future electricity price hikes, even if some of the data centers themselves are hypothetical at this point,” the lawmakers wrote Thursday, pointing specifically to surging prices in capacity auctions held by PJM Interconnection, an electric utility giant that covers Washington, D.C., and 13 Mid-Atlantic and Midwestern states.

The Democrats noted that price hikes go well beyond PJM’s territory; at least 210 utilities across the country this year have raised or proposed raises in electric bills, totaling more than $71 billion in increases spread across 65 million consumers.  

“Without reforms, continued data center expansion will exacerbate this trend,” wrote Markey and his colleagues, Sens. Chris Van Hollen of Maryland, Elizabeth Warren of Massachusetts, Peter Welch of Vermont, Richard Blumenthal of Connecticut, Adam Schiff of California, and Raphael Warnock of Georgia.

Citing the Federal Power Act, the lawmakers made the case that FERC is required to make sure utilities and transmission planning regions “maintain just and reasonable rates that are neither discriminatory nor preferential.” To do that, the commission should “reject transmission-related filings that do not properly address cost allocation or allow the cost of transmission built to serve data centers to be spread across the region,” they wrote.

The senators pushed FERC to pursue efforts that include investigations into regional operators or utilities whose rates are found to be “unjust, unreasonable, unduly discriminatory, or preferential to data centers.” There’s precedent for that kind of oversight, per the letter: In February, the commission probed PJM over issues linked to AI-enabled data centers at generating facilities under the utility’s purview.

The lawmakers also suggested the commission continue its inquiries into load forecasting by regional transmission organizations and independent system operators, and tread carefully on Energy Secretary Chris Wright’s October rulemaking request of FERC to standardize and expedite the interconnection of data centers and other large loads. 

“We urge FERC to prioritize the concerns of residential ratepayers,” the Senate Democrats wrote. The outcomes of that rulemaking could “significantly change the degree to which households are charged for connecting big electricity users to the grid.”