AI Data Centers Drive a 1,038% Capacity Price Surge Onto Factories

PJM Interconnection's capacity prices have risen from $28.92 per megawatt-day in 2024 to $329.17 — a 1,038% jump — and the grid operator's independent market monitor has identified data center load growth as the primary cause. The consequences are already visible on factory floors across the mid-Atlantic and Midwest. In Sugarcreek, Ohio, the 141-year-old Belden Brick Company watched its monthly capacity charge climb from $1,600 to $12,000.

Belden's electricity costs surged 90% last year, largely because of data center demand, Reuters reported. The company raised brick prices by 4%, and profits still shrank. That brick goes into houses, schools and storefronts, which means the AI buildout reaches households through two channels: the monthly utility bill, and the price of goods made by factories paying the same higher power rates.

What repriced the grid?

PJM runs the grid with the nation's highest concentration of data centers, serving the mid-Atlantic and Midwest. Capacity prices — the payments that keep generators available at peak — rose more than elevenfold in two years.

PJM's independent market monitor concluded that "data center load growth is the primary reason" for the tight supply and high prices.

Factories absorb more of that shock than homes do. Capacity charges make up about 10% of residential bills but can run up to three times that share for manufacturers. As of December 2025, industrial electricity prices had risen 31% in Pennsylvania and 26% in Ohio, against 7% nationwide.

Why are manufacturers squeezed from both sides?

Demand keeps building. The U.S. Energy Information Administration expects national power use to beat record highs in 2026 and 2027 as AI use surges. Its May outlook projected:

• Industrial electricity consumption rising 1.0% in 2026 and 4.0% in 2027
• Residential prices averaging 18.2 cents per kilowatthour this year, up nearly 5%
• PJM peak summer demand climbing from 161,000MW to 241,000MW over 15 years

Regulators are struggling to protect households, and factories are collateral damage. Manufacturers sit in the same rate class as data centers, so rules aimed at hyperscalers land on them too. The Federal Energy Regulatory Commission has proposed transmission charges for onsite generation, which would penalize plants that build their own power.

Cicio of the Industrial Energy Consumers of America told Reuters: "Manufacturers are not data centers. We should not be impacted by their effort to manage data centers."

The regional stakes are large. Steel alone supports more than 56,000 jobs and roughly $94 billion in annual activity inside PJM's region, according to House Energy and Commerce testimony.

How does the second bill reach the kitchen table?

Consumer prices rose about 3.7% in the year through September, based on the Consumer Price Index. Retail sales still hit $745.0 billion that month, a firm demand background. Shoppers are already stressed: University of Michigan consumer sentiment sat at 48.1 in September.

A Cornell study found that the energy costs from AI data centers land hardest on lower-income, rural households.

Belden's warning applies well beyond brickmaking. "There are going to be some companies that are on the razor's edge," the company said. Firms at that edge may raise prices, slow hiring, or relocate.

What decides whether you pay once or twice?

The deciding factor is rate design. States are exploring standardized large-load tariffs to replace confidential data center contracts. If those tariffs put hyperscalers in their own class, the cost stays with the companies driving it. If manufacturers remain lumped in, households pay at the meter and again at the checkout.

Three decisions will shape the next two quarters:

• FERC's final action on onsite-generation charges
• PJM's next capacity auction
• Whether Pennsylvania and Ohio regulators separate data centers from factories in rate classes

Until rate classes are redrawn, every PJM capacity auction will keep converting data center demand into a cost that manufacturers pass downstream to consumers.