Microsoft to Pay Higher Power Rates for US Data Centers

Policy actions are being taken in response to rising residential electricity prices linked to the growth of AI data centers in the United States.

President Trump announced that Microsoft will pay higher electricity rates for its US data centers, with the stated aim of preventing increased utility costs for households. This announcement comes as energy demand from AI data centers has contributed to higher residential electricity prices in several states.

Microsoft’s president, Brad Smith, introduced a “Community-First AI Infrastructure” plan, which includes a commitment that the company will not ask for electricity rate discounts or tax breaks in communities where it operates data centers. This approach is intended to address concerns about the impact of large-scale data center operations on local energy costs.

In at least 13 states, residential customers have experienced higher electricity bills, a trend attributed to the increased demand from AI data centers. The issue has prompted calls for policy changes and new funding mechanisms to manage the growing energy requirements of technology companies.

What the numbers show

• Over $15 billion in new power-generation projects are included in the statement of principles
• At least 13 US states have seen higher residential electricity prices due to AI data centers
• The reforms are contingent on participation from the PJM Interconnection grid region

The Trump administration, along with a bipartisan group of governors, has called for reforms in the PJM Interconnection grid region. They urged technology companies to contribute funding for new power generation projects to help prevent further increases in electricity costs linked to AI data center expansion.

The statement of principles associated with these reforms outlines more than $15 billion in new power-generation projects. These projects are dependent on the involvement of the PJM Interconnection, which manages the electric grid for a large portion of the eastern United States.

Microsoft’s commitment not to seek local rate discounts or tax incentives is part of a broader policy response to the challenges posed by increased energy use from AI infrastructure. The company’s plan was presented as a measure to support communities hosting these facilities.

Efforts by government officials and technology companies continue to focus on balancing the energy needs of AI data centers with the goal of maintaining stable electricity prices for residential customers.

* This article is based on publicly available information at the time of writing.