A note from the Bank of America Institute titled “AI sparks a rise in utility bills” details how average utility payments have risen 3.6% year-on-year in Q3 2025: “Rising consumer prices for electricity and gas suggest bill pressure could intensify in the coming months, depending on how the winter weather shapes up.”

But compounding the issue of rising prices in the consumer sector alone is the increasing demand for electricity generation capacity—and investments into the grid—as a whole. This need for capacity and grid investment, writes BofA’s David Tinsley, is the result of building data centers to support the massive boom in artificial intelligence.

“An important question both for understanding current utility bills and how they will evolve is whether energy demand—most obviously electricity—from the explosive growth in AI and the associated build-out of data centers is also pressuring residential bills?” Tinsley wrote. “BofA Global Research sees manufacturing and data centers as important drivers of electricity demand over the next 10 years. Also worth noting—increasingly residential electrification, including in vehicles, is also pushing electricity demand up.”

But Tinsley adds that prices are pulled up by greater demand more broadly on the power network: “Rising demand for electricity from both data center development and manufacturing growth is already being reflected in residential customer rates. The impact runs through the spending on enhancements to the transmission and distribution grid required for data center build-outs, which is incorporated into the tariffs of all the ratepayers (residential, commercial and industrial) on the system, and then into both higher energy and capacity pricing.”

A vast amount of private sector money is due to be pumped into the economy in order to address the infrastructure needed to power the AI wave. The Stargate Project alone, announced in January this year, will invest $500 billion over the next four years into building new AI infrastructure for OpenAI in the U.S.—with founding equity funding partners including OpenAI itself as well as SoftBank and MGX.

On top of that tech giants including Microsoft, Google, Amazon, Meta, and Nvidia have poured tens of billions of dollars into building and upgrading data centers in a bid to stay ahead in the AI race and keep up with the booming demand for new products and LLMs. Indeed, the investment has been so massive that without data centers, America’s GDP growth in the first half of 2025 would have been just 0.1% on an annualized basis, according to Harvard economist Jason Furman.

But the question still remains: Even with the billions being pumped into infrastructure, when will the supply of power catch up with demand for it?

Tinsley had bad news for consumers: “There is likely further upside ahead.”

“Electricity supply is still struggling to catch up with the rapid increases in demand because of the capital intensity and regulatory requirements around building more generation and transmission capacity,” he explained.

The economist added that times of peak demand will continue to push prices higher, and that while solar generation and storage will be able to plug some of the gaps, they do not offer the long-term solution needed to keep the lights on (literally) in both America’s homes and its data centers: “At a time when lower-income households are already under pressure from slowing wage growth, rising electricity and gas bills would be another headwind. But, more broadly, rising utility bills could be a headwind to overall consumer discretionary spending if rises are significant and persistent.”