Investor-owned utility companies increased their capital spending plans by more than 27% to at least $1.4 trillion through 2030—up from $1.1 trillion a year ago—and that’s not even counting privately held companies, according to a new report released Tuesday from the nonprofit PowerLines.

The AI power boom and the wave of construction for data centers is the leading cause of new spending growth nationwide, but it’s a convergence of spending causes that have triggered utility bills to spike about 40% since 2021—“with no signs of slowing down”—PowerLines said. 

In addition to the AI era, spending also is growing rapidly because of aging infrastructure, grid hardening from rising extreme weather events and climate change, growing electrification, and population growth. In fact, most of the growth in recent years is unrelated to AI, but the AI data center boom is widely expected to become the leading driver in utilities spending—and consumer prices—going forward.

“Investor-owned utilities are signaling a record-breaking wave of capital spending, and history shows that those plans are often a leading indicator of future utility rate increase requests,” said PowerLines executive director Charles Hua in a statement.

Utilities requested a record-high $31 billion in rate hikes in 2025 across the nation—more than twice the near record from 2024—as consumer and political backlash grows over rapid data center and power plant construction nationwide.

Look to the South

The biggest bulk of spending is in the South—from Texas to Maryland—where $572 billion in spending is planned. Next up is the Midwest with $272 billion in spending on the books.

The South is home to both the nation’s biggest population and manufacturing surge, as well as much of the data center growth from, again, Texas to Virginia’s Data Center Alley.

So it’s no coincidence that the top three spenders are all southern. Charlotte-based Duke Energy leads the way with an industrywide, record-high spending plan of $103 billion over the next five years, while Florida-based NextEra Energy ranks second at $94 billion. And the aptly named, Atlanta-based Southern Company is next at $81 billion. The top non-Southern utility is California’s PG&E at almost $74 billion.

Utilities spent much of their most recent quarterly earnings calls touting their efforts to prioritize consumer affordability and pointing out that hyperscalers and data center developers are increasingly adopting “pay for your own power” models.

But not all developers are paying for their own generation, and those that are paying for new power plants aren’t necessarily covering the bills for the transmission and distribution components of infrastructure.

Transmission and distribution accounts for nearly half of all new spending, while another 30% is geared toward new power generation, according to PowerLines.

“Our business model is hard to understand,” said PG&E CEO Patricia Poppe on her most recent earnings call. “And it’s hard for people to believe and see that you can raise profits and lower rates all at the same time.”

While most utilities are focusing more on affordability, PowerLines said, “many utilities remain concerned that there is only so far they can go to stop costs from spiraling out of control while still remaining profitable. They argue that without major capital investments in the power system, consumers risk paying for outdated, unreliable, and even dangerous energy infrastructure.”

But PowerLines also contends that utilities can and should do more to utilize the existing capacity of the power grid. Too often existing fossil-fuel-fired power plants sit idle when demand is weaker, or renewable energy facilities generate power that’s wasted—such as the wind blowing hard overnight when people are sleeping.

Before building too many new power plants, utilities should utilize more tools to make the existing grid more efficient, such as more battery storage, virtual power plants, and other technologies, such as AI-powered grid flexibility solutions that essentially reduce power consumption from large consumers at times of peak load demand on the grid.

“Our century-old utility regulatory system has accelerated the size of the pie of utility capital spending, even when more cost-effective solutions that could lower consumers’ utility bills are available yet under-deployed,” Hua said. “It is incumbent upon state policymakers and regulators to ensure utilities prioritize these solutions that improve the efficiency, affordability, and reliability of the grid.”