Bank of America economist David Tinsley warns that consumers are indirectly footing part of the bill for the AI boom through higher utility costs. Average utility payments rose 3.6% year-on-year in Q3 2025, with Tinsley linking the increase to soaring electricity demand from data centers powering artificial intelligence. The build-out of infrastructure needed to support the AI boom—despite projects like the $500 billion Stargate initiative and massive investments by Microsoft, Google, and Nvidia—is straining the grid, driving up costs for all ratepayers, he said. Despite GDP-altering investments, electricity supply is struggling to keep pace with demand, suggesting prices will continue to rise and pressure household budgets in the months ahead.
Silicon Valley may be pumping billions into the AI boom, but it seems consumers are inadvertently paying a share too.
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.”
