AI data center surge pushes US rust belt manufacturers' power bills to record highs

A 90% surge in electricity costs is no small matter, especially for businesses that have long relied on stable power prices. That is the reality facing the Belden Brick Company in Sugarcreek, Ohio, where electricity bills have soared as utilities grapple with the rapidly rising power demand from AI data centres.

Belden is far from alone. Businesses across the region, including manufacturers in Ohio, as well as institutions such as Texas A&M University and the University of Notre Dame, are seeing monthly electricity bills spike due to soaring capacity charges. In some cases, those charges have jumped from around $1,600 a month to as much as $12,000, highlighting the growing strain AI infrastructure is placing on the US power grid.

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The rapid expansion of AI data centres across the United States is driving up electricity costs for manufacturers as utilities and regulators work to ensure the grid can meet soaring demand. Federal, state, and local authorities are increasingly pushing major technology companies to shoulder a greater share of these costs. However, several proposed measures also affect traditional manufacturers, which are often grouped into the same electricity pricing category as hyperscale data centres.

At the heart of the issue are capacity charges—fees designed to ensure enough electricity is available during periods of peak demand. While these charges typically account for around 10% of residential electricity bills, they can represent a much larger share of industrial energy costs. In the region served by PJM Interconnection, the largest US grid operator, capacity prices have surged by more than 1,000% since 2024, driven largely by the explosive growth of power-hungry AI data centres and a slower pace of electricity supply expansion.

Manufacturers' margins collapse

The steep rise in energy costs is squeezing manufacturers operating on thin profit margins. Companies in sectors ranging from brickmaking and plastics to electronics manufacturing say they have been forced to raise prices, absorb lower profits, explore on-site power generation, or shift production to off-peak hours to remain competitive. Industry groups warn that if electricity costs continue to rise, some factories could struggle to remain viable at a time when the US government is trying to revive domestic manufacturing.

Data centre operators argue that the industry's rapid expansion is also driving long-overdue investments in America's electricity grid. They contend that rising power costs are not solely the result of AI infrastructure but are also being fuelled by ageing power plants, transmission bottlenecks, and years of underinvestment in grid capacity.

Manufacturers, however, are urging regulators to distinguish factories from data centres when designing future electricity pricing and grid policies. They argue that businesses producing essential goods should not bear the financial burden of supporting the AI industry's rapidly growing demand for electricity.