Some parts of the country — California, New England — have high electricity prices but not many large-scale artificial intelligence data centers. Some places — Texas — have artificial intelligence data centers and relatively low prices.
The area spanned by PJM Interconnection — the country’s largest electricity market, which covers some or all of 13 states and 67 million people from Richmond to Chicago — has both.
Virginia’s “data center alley,” around Ashburn in Loudon County, is perhaps the hottest AI hotspot in the country. Ohio, Indiana, and Pennsylvania are also attracting substantial interest from hyperscalers.
Meanwhile, electricity prices in the PJM territory have turned into a political crisis that transcends party ideology. New Jersey’s new governor, Democrat Mikie Sherrill, centered her campaign around a pledge to freeze prices. Pennsylvania’s governor, Democrat Josh Shapiro, reached an agreement with electricity producers at the beginning of last year to cap capacity prices — payments made to generators to be available during times of grid stress — at a level the system’s capacity auctions now regularly hit. And Indiana’s governor, Republican Mike Braun, has been on the warpath against high utility bills, declaring in September of last year, “Hoosiers have been burdened with utility rate increase after increase. We can’t take it anymore.”
A review of electricity price increases from 2019 to 2024 and from 2024 to 2025 released by Lawrence Berkeley National Laboratory just this week found that “increases in capacity prices in the PJM region in 2025 were a significant contributor to the rise in year-over-year retail prices in many mid-Atlantic states.” The researchers found that “many PJM states saw large price increases in 2025 vs. 2024,” calling out Washington, D.C., New Jersey , and Maryland specifically. Overall in PJM, the LBNL review found that capacity costs drove up the wholesale price of electricity in PJM by $0.09 per kilowatt-hour from 2024 to 2025, and projects another $0.06 hike in 2026.
On the surface, the coinciding phenomena of increased data center activity and rising electricity prices seem like a clear case of cause and effect. A closer look at utility price and rate data from Heatmap and MIT’s Electricity Price Hub, however, reveals a more nuanced story.
First, the big picture: In the past year, the 12-month rolling average of electricity prices have grown 10% in PJM, compared to 4.5% nationally, while average bills in PJM have risen by $14.83 compared to $5.47 nationally. In the past five years, prices have gone up 48.9% in PJM versus 33.2% nationally, while bills in PJM have risen by $49.50 compared to $35.21 nationally.
Across the PJM territory, some 63% of utilities in the Heatmap-MIT dataset have seen prices grow faster than the national average over the past year, and 72% have seen their prices grow faster than average in the past five years.
But there are stark distinctions at the regional and state levels. To get a better sense of these differences, we looked at the components of electricity bills and price growth in different parts of the PJM territory, including the utility territories with the fastest growing prices and the ones with the most data center growth.
Many of the fastest-growing utility bills in PJM are on the East Coast, particularly in the Mid-Atlantic, where prices for Pepco in Maryland and Washington, D.C. have gone up by 21.4% and 25.2%, respectively, in just the past year. In the case of D.C., the largest source of that price growth was electricity generation, the cost of which rose 32.5% in the past 12 months.
The D.C. Public Service Commission approved a rate hike last May citing a recent PJM capacity auction and tacking on a “Capacity Price Adder” to account for high prices. (For more on “adders,” “riders,” and other more obscure bill charges, see the explainer from my colleague Jeva Lange.) The average bill hike in the May 2025 order was almost $21, or 17.7%, the order said.
“Generation rates have risen substantially, primarily due to capacity price increases,” the commission wrote, which it attributed to a litany of factors. These included growing demand from data centers, but also the “retirement of generating facilities across the regional electric wholesale market” and “increasing mandates from the District’s Renewable Energy Portfolio Standard.”
This helps explain why the cluster of states around D.C. have seen outsize generation price hikes: They tend to rely on gas from others states, and have also decided, as a matter of public policy, to institute substantial additional charges to meet public policy goals such as boosting the share of renewable energy in the state’s generation mix, which often means buying certificates for electricity produced out of state.
Next door to D.C., Maryland utilities have also had to deal with high capacity prices — some $14 of bill increases for Pepco, according to the Maryland Office of People’s Counsel, can be traced back to higher capacity payments. Maryland ratepayers specifically must also pay for “reliability must run” service: four coal-and-oil-fired units that operate outside PJM’s wholesale system and are instead funded directly through customer rates in a particular geographic area.
Maryland’s Office of the People’s Counsel argued in a brief explaining why rates were rising that not only did “RMR” payments lead to higher bills directly, they also helped push capacity market costs in Maryland up against the statutory cap. Because the capacity from those generators isn’t included in the wholesale market (they’re compensated directly), supply is artificially limited and thus “likely had spillover effects into the RTO as a whole, increasing the RTO-wide clearing price and impacting customers throughout the region.”
But what about utilities in PJM where rate hikes were more restrained?
In Virginia, the epicenter of data center growth in PJM, customers of the Dominion Energy utility Virginia Electric and Power Co. saw their prices grow 11.6% over the last year, with the generation portion of the bill growing 16.8% in the past 12 months. That’s higher growth than average for PJM, but lower than New Jersey and Maryland, which do not serve the same concentration of AI facilities.
For another Virginia utility, Appalachian Power, prices actually dropped slightly in the past 12 months, by 1.6%, with the generation portion falling 5.2%. Appalachian Power announced a rate cut averaging $10 per household last fall, which it said came out of the “fuel factor,” or the raw material costs that are passed on to customers.
Despite its crush of data center development, Virginia still has electricity rates below the national average, and much lower than some other PJM states. Natural gas and nuclear dominate the state’s generation mix, according to data from the Energy Information Administration, and that nuclear power especially is cheap on a kilowatt-for-kilowatt basis.
Virginia also has fewer worries about grid congestion because much more of its generation is local, whereas in other places (namely Maryland), that’s been a major cost driver. Virginia’s $15.27 per kilowatt-hour average electricity price is about in line with the “South Atlantic” average according to the Energy Information Administration, but still lower than Delaware, D.C., Maryland, or New Jersey.
To the extent that Dominion has raised prices, it has attributed the increases to inflation, not to increased demand. In Richmond specifically, it chalked up higher prices to bouts of cold weather.
That said, Dominion’s base rate — the core cost of service in a regulated, vertically integrated utility system like Virginia’s — is rising for the first time since 1992. Going forward, Dominion ratepayers will see another rate hike of around $11 per month this year, and around $2.35 in 2027.
Dominion had also asked to recategorize its capacity purchases from the base rate to the fuel charge, which it said would “promote rate stability.” A typical average customer would face a fuel factor expense hike of $10.92 per month for typical electricity use, Dominion said in a filing, which would include $1.98 of capacity expenses. But the SCC ended up rejecting that request, arguing that it was not “reasonable at this time not to shift cost recovery of purchased capacity expenses from base rates to the fuel factor,” which could mean that rates do not adjust smoothly with the changes in capacity payments.
Virginia’s success in avoiding higher costs may be a matter of timing as much as anything else. Virginia fits awkwardly into the PJM system, with the state still dominated by vertically integrated utilities such as Dominion, as opposed to the restructured electricity markets in much of the rest of the system.
Pro-utility groups and Dominion itself have pointed to Virginia as an example of how the regulated electricity model can protect consumers compared to the restructured one. But whether ratepayers will be convinced remains to be seen. Complaints about eye-popping bills are a mainstay of local — and social — media in the state, especially after base rate hikes kicked in.
Heatmap Illustration/Pattern Energy 
