AI data centers push Rust Belt factory power bills higher

AI data center growth is raising power costs for manufacturers across PJM Interconnection’s 13-state grid, with capacity prices climbing from $28.92 per megawatt-day in 2024 to $329.17 in 2026, according to Reuters. The cost shift matters for the tech industry because the AI buildout being funded by Big Tech is now colliding with the power economics of steel, brick and other energy-intensive industrial businesses.

Reuters reported that factory electricity bills are rising faster than bills for other business customers or households in many Rust Belt communities served by PJM, the largest grid operator in the United States. One example is Belden Brick Company, a 141-year-old Ohio manufacturer, where monthly electricity bills have increased from $1,600 to $12,000 because of a higher capacity charge, according to Reuters.

The pressure is especially acute for steelmakers. The Steel Manufacturers Association has warned that companies concentrated in PJM territory are paying tens of millions of dollars more each year for electricity. The group says power accounts for 20% to 40% of the total cost of steel production.

Steel production is also a large load on the grid. Each electric arc furnace used in steelmaking draws 40 to 200 megawatts while operating, and the U.S. steel industry can use as much as 11 gigawatts at peak production across all facilities, according to the Steel Manufacturers Association.

Data centers are customers and cost drivers

The steel industry is not outside the data center boom. The Wall Street Journal reported that data center construction requires an estimated 1 million tons of steel a year, creating demand for U.S. producers. The same buildout is also increasing operating costs by tightening regional power markets.

Ohio-based steelmaker Metallus said its electricity costs have risen 70% since 2024, adding $15 million in annual energy costs, according to The Wall Street Journal. That is a material hit in a business where electricity is not an office overhead line item, but a production input.

PJM has forecast that electricity demand in its territory will exceed available supply by 6.6 gigawatts starting in 2027, The Wall Street Journal reported. The publication described that shortfall as equivalent to more than six nuclear power plants.

The political tension is clear. President Donald Trump has promoted a “Made in America” manufacturing agenda while also backing the technology companies behind the AI data center surge. CBS News has reported that the U.S. lost 83,000 manufacturing jobs in Trump’s first year back in office.

Policy responses have limits

Some manufacturers have raised customer prices to offset higher power bills, while others are weighing relocation, Reuters reported. The Wall Street Journal also cited steel executives warning that production outages could become more likely if local grids are overloaded.

The White House has pointed to a Ratepayer Protection Pledge under which major data center companies would help pay for new power generation and transmission infrastructure. The pledge does not provide a meaningful enforcement mechanism. The Trump administration has also joined state governors in urging PJM to hold a one-time backstop auction to buy new power supply capacity.

Building enough generation and transmission remains the harder problem. In 2025, U.S. power projects totaling 266 gigawatts of generation capacity were canceled, according to Michael Thomas, CEO of Cleanview, a data platform tracking renewable energy and data center projects. Thomas said that amount equals 25% of current U.S. electricity generation capacity and exceeds the total generation of Texas. Clean energy projects accounted for 93% of the canceled capacity.

Thomas identified several causes: Trump administration cancellations of wind projects, local opposition to renewable projects in states including Ohio and Indiana, and a shortage of transmission lines that raises interconnection costs for new clean energy projects. Those same states are also courting data center development. For AI infrastructure buyers, the bill is no longer limited to land, chips and construction. In PJM territory, the externality is showing up on factory power bills.

This story draws on original reporting from Ars Technica.