States Probe Utility Profits Amid AI-Driven Electric Bill Spikes

Electricity costs are climbing for households in multiple states, prompting elected officials to question how much profit utilities should earn while they build out power systems to meet new demand. The stakes are immediate for residents facing higher monthly charges and for the reliability of grids that must expand to serve data centers and broader electrification.

At least six states—Arizona, Indiana, Maryland, New Jersey, New York and Pennsylvania—are reviewing or blocking proposed rate increases. Regulators in these states are also examining whether the traditional formula for setting utility returns on investment remains appropriate when demand growth accelerates. Arizona Attorney General Kris Mayes, a Democrat seeking reelection, is contesting two separate 14 percent rate requests. Indiana Republican Gov. Mike Braun has seated new commissioners tasked with scrutinizing filings, including AES Indiana’s request for a 10.1 percent increase that would add $193 million annually from customers.

Pennsylvania Gov. Josh Shapiro, also a Democrat running for reelection, persuaded PECO to withdraw a 12.5 percent hike that would have added roughly $20 per month for the average residential customer. Shapiro wrote that the “20th century utility model is broken” and that corporate profitability should no longer be the primary driver of infrastructure spending. New Jersey’s Board of Public Utilities launched a broad review of revenue models for a modern energy system.

The Energy and Policy Institute reported that profits at 110 investor-owned utilities rose from just under $39 billion in 2021 to more than $52 billion in 2024. Former utility executive Mark Ellis estimates that about 10 percent of a typical residential bill reflects returns above levels justified by Supreme Court precedent. Utilities counter that federal data show electricity as a share of household income has declined over two decades and that allowed returns are essential to attract capital for grid upgrades, new generation and reliability projects. They warn that lower returns in one state will simply shift investment elsewhere.

AI data centers are a visible driver of projected load growth in several regions, though utilities and analysts note that electrification of vehicles and buildings also contributes. Morningstar analyst Travis Miller said affordability concerns now dominate earnings calls because utilities cannot secure future rate increases if current bills already strain customers. Johns Hopkins economist Paul Ferraro described challenges to authorized returns as political responses to disagreements over who should capture gains from essential infrastructure rather than solutions to the sector’s core investment needs.