Federal regulators on Thursday ordered regional grid operators to accelerate connections for energy-hungry artificial intelligence data centers to the nation's aging electric transmission system, a decision that comes amid growing concerns about who will bear the costs and consequences of the AI boom's massive power demands.
The Federal Energy Regulatory Commission voted unanimously to direct six regional grid operators serving 200 million Americans to ensure that AI data centers and other large power users can connect to the transmission system more quickly. While data centers would pay the full cost of grid upgrades needed for their connection under the order, the decision does little to address tightening energy supplies that are driving up electricity bills in some areas and raising warnings of potential blackouts.
Communities Push Back Against Data Center Expansion
The commission's action comes as a backlash grows against data centers over concerns about the massive amounts of energy and water they use, along with fears about noise and air pollution, water shortages and loss of open space or farmland. More than 4,000 data centers now operate in the U.S., with an additional 3,000 planned or under construction, including some that consume more energy than a small city. The tech industry is running into widespread opposition from communities where residents don't want to live next to or near a data center.
Data from the Electric Power Research Institute shows that data centers now account for about 5% of U.S. electricity demand, but could triple by 2035. In Virginia, data centers already account for more than 25% of overall demand and could rise to more than 40% by 2030.
Ratepayer Protection Questions Remain
Laura Swett, an appointee of President Donald Trump who chairs the commission, acknowledged widespread concerns about affordability. "Many Americans are increasingly concerned about the interconnection of large loads, and data centers will increase their bills in that stress," Swett said. She pledged to take seriously the commission's mission to ensure rates are reasonable, though critics note the order cannot address the fundamental supply constraints driving up costs.
Utilities, states and regional grid operators had worried that the Republican administration's plan would remove their authority to manage the process. FERC said the order leaves states in control of retail electric rates, terms and conditions. Clean energy advocates have urged regulators to advance, rather than undermine, state-level efforts to require the use of renewable energies.
Energy Secretary Chris Wright had urged FERC to act eight months ago in an effort to help the United States better compete with China for superiority in the fast-growing AI sector. Tech companies and data center developers welcomed the chance to connect faster to the country's power supply.
Construction Lags Despite Industry Spending
While tech companies have continued to raise their spending on data centers, evidence suggests construction is lagging. A J.P. Morgan report one month ago found that, based on satellite images, over 60% of data center capacity planned for completion in 2027 hasn't begun construction, and another 7% is delayed. The report blamed permitting delays and difficulty getting gas turbines, transformers and skilled labor.
Tech giants are scrambling to find enough power for their data centers and report that, in some places, it will take years to connect to the electric grid. Companies such as xAI, Google, Microsoft, Meta, Oracle, OpenAI and Amazon have signed Trump's Ratepayer Protection Pledge, in which they agreed to build or buy new sources of power generation for their data centers and cover the expense of infrastructure upgrades.
Robert Montejo, a lawyer who represents data centers, said the most important message from FERC's action is that AI "has fundamentally changed the electricity landscape. The grid and prior policy were not built for the pace and scale of demand we're seeing from AI infrastructure, and FERC is signaling that standing still is no longer an option."
FERC told grid operators to respond within 30 days on how they will ensure adequate power supplies for new and future data centers, and within 60 days on plans to integrate large power users in line with the new guidelines. Rob Gramlich, a Washington-based energy consultant, said states should quickly develop rules to accommodate large power users and prevent cost shifts to residential and business customers. FERC could assert broader jurisdiction over interconnection issues if states don't act quickly, he said.
Why This Matters:
The rapid expansion of AI data centers represents a fundamental shift in how America's electricity system serves corporate versus residential needs. While tech companies promise to pay for grid upgrades, the underlying strain on power supplies threatens to drive up costs for ordinary ratepayers who have no choice but to share an increasingly stressed grid. Communities facing data center construction are already experiencing environmental impacts—from water consumption to air quality—without clear mechanisms to ensure local concerns are heard in federal decision-making. As data centers grow from 5% to potentially 15% of national electricity demand by 2035, the question of who benefits from AI's growth and who bears its costs becomes increasingly urgent. The tension between accelerating corporate AI development and protecting residential ratepayers and local communities will likely intensify as construction continues to lag behind ambitious industry plans.