Power Hungry

Why your Peco bills could increase thanks to new hyperscale AI data centers

Published

If you give a computer a task, it’s going to need electricity to perform it. The more difficult the problem, the more resources it requires. This is at the heart of the fight against the data centers behind AI – often an incredibly complex and power-hungry process.

You might think that tech giants that build and use data centers would cover 100% of the costs. However, the knock-on repercussions of this heavy power drain could impact the amount you owe on your Peco bill. Let us explain.

1946

The first “data center”

If you needed help with a calculation 80 years ago, you could use the ENIAC, the first general-purpose computer, built at the University of Pennsylvania.

It was 1,440 times faster than a hand calculator but at a cost: high energy demands. The ENIAC had its own dedicated power lines and consumed 150 kWh of electricity.

2000

Powering search engines

By the mid-2000s, we could solve the same problem at a fraction of the ENIAC’s speed thanks to search engines like Google.

Google processes billions of traditional search queries a day via data centers – warehouse-scale, resource-intensive facilities. These campuses can consume between 10,000 and 25,000 kWh, according to a 2025 report by the International Energy Agency, to run computers and keep them cool.

Data centers don’t just power search engines; they also sustain streaming services, social media, and much more. However, workflows are increasingly shifting to use artificial intelligence.

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2022

AI in everything, everywhere, all at once

Today, unless you actively opt out, your Google search will likely be augmented by AI. “Historically, you would just get hyperlinks, and then you would have to click through and read the webpages yourself,” said Benjamin Lee, professor of computer science at the University of Pennsylvania and visiting scientist at Google. “In some sense, generative AI is doing the reading for you and trying to anticipate the actual answer you were looking for.”

The average Google Gemini prompt uses about 10 times the energy of a pre-AI Google search. This is partly because AI technology involves complex algorithms that require more computing power, but it’s also because between the 1960s and 2010s the basic building blocks of computer chips were increasingly getting smaller and more power-efficient. Within that timeframe, our computational ability multiplied by sixfold with only a 6% increase in power usage, according to Lee.

But those efficiency gains eventually stalled.

“When AI came along in late 2022, we realized we needed hundreds – or thousands – times more [computational power], and the transistors weren’t keeping up,” Lee said. “The hardware side slowed down, even as the computational demands went up by a lot.”

To meet the needs of the AI boom, we could no longer count on transistors becoming more power efficient. Consequently, “hyperscale data centers” that power AI tools consume exponentially more resources than conventional ones, needing anywhere from 100,000 to 1,000,000 kWh, according to a 2024 white paper by the Electric Power Research Institute.

To put it in perspective, in a single hour, a hyperscale 1,000,000-kW data center running at peak capacity can consume more electricity than every household in Philadelphia combined.

Hyperscale data centers can consume a city’s worth of electricity in an hour

ENIAC

150 Philly households' energy usage

Conventional

Hyperscale

The typical Peco customer uses about 0.94 kW per hour in July.
If all 679,428 households in Philadelphia consumed that amount of electricity …
… it would still be less than a hyperscale 1 million kW facility’s electricity use – the equivalent of over 1 million Philly households.

A report by Wood Mackenzie, an energy research firm, found that utility customers might already be shouldering some of the cost of servicing heavy users of electricity, including data centers. These hyperscale facilities and their projected demand for power could impact all three categories on your bill: generation, transmission, and distribution.

Let’s walk through each one.

  • Generation

    Generation refers to how power stations produce electricity from primary energy sources like fossil fuels, solar, or wind. Pennsylvania generates about 60% of the state’s electricity with natural gas, according to the American Gas Association.

    “There's only so much gas in the market and, with data centers coming online, there's increased competition for it,” said Elizabeth Marx, executive director of the Pennsylvania Utility Law Project, a statewide legal aid program representing low-income consumers and protecting their access to affordable energy and water.

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    Pennsylvania Gov. Josh Shapiro recently proposed that hyperscale data centers supply their own power to reduce the burden on residential customers to pay for infrastructure costs. However, not everyone agrees that it will work.

    “Unless they are building clean generation that doesn't rely on and constrain our gas supply, [data centers are] having an impact on the price of gas,” Marx said, “and [that cost] flows into your electricity bills.”

  • Transmission

    Transmission is the middle step of moving electricity from a generating power station to a substation. PJM Interconnection, which serves Pennsylvania, plays a significant role in getting AI data centers connected to the grid.

    PJM has a capacity market, where utilities – like Peco – pay power plants to guarantee enough power to meet future energy needs. This ensures that enough electricity will be available at high usage and to avoid blackouts.

    “The biggest impact that we're seeing already from data centers is on capacity market prices,” Marx said. In 2024, AI companies started shopping around for power purchasing agreements directly with power suppliers.

    The increased demand for capacity without greater supply increased the cost of electricity. The capacity price during the 2024/2025 auction was about $46 per MW/day, according to Monitoring Analytics, an independent market monitor for PJM. The following year, it surged to $297 per MW/day.

    In a recent quarterly report, Monitoring Analytics said that “large data center loads have already had a significant and irreversible impact on PJM customers.” Between 2016 and 2025, Peco customers saw a $20.46 increase in the supply portion of their bill, which includes generation and transmission.

    Peco’s Price to Compare has increased steadily since 2022

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    14 cents
    Jun 2022
    Jun 2026

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    Source: Peco’s Price to Compare is what customers pay if they do not shop around for an alternative electricity supplier

    Pa. law requires that Peco is not allowed to profit off generation and transmission; you are just paying the rate set at PJM wholesale auctions. “Supply costs are set by the competitive market, are not controlled by Peco, and do not generate a profit for the company,” said Candice Womer, communications manager at Peco.

  • Distribution

    Distribution is the final phase, where electricity moves from a transmission station to your home. It makes up 50% of your electric bill and, unlike the supply side of the electricity equation, can generate a profit for utility companies.

    Almost two-thirds of Americans believe that a major reason behind their rising home energy costs is utility companies’ bottom line, according to a recent Pew Research Center survey.

    In its second quarterly report of 2025, Peco reported $136 million in adjusted earnings, compared with $93 million in the same period in 2024. The company said in its earnings report that it used the profits to improve distribution infrastructure.

    When utility companies invest in the electric grid to ensure it is ready for peak demand or storms, those investments are often baked into distribution costs. “Peco must balance its obligation to serve new customers with the risk of overbuilding infrastructure,” Womer said. “When distribution upgrades are needed, those costs are paid up front by the data center customer through a Contribution in Aid of Construction, ensuring there is no impact to other customers.”

    One of the fees baked into distribution charges on your monthly bill is the Universal Service Fund. This helps fund programs like Peco’s Customer Assistance Program that help low-income households afford their utilities. In her testimony before the Pennsylvania House Energy and Consumer Protection, Technology, and Utilities Commission earlier this year, Marx said that in Pennsylvania, “universal service costs are only allocated to residential customers.”

    Despite their direct impact on rising costs, data centers pay nothing to support these programs, she said.

What happens when electricity is unaffordable

About half of all adults (51%) in the U.S. say they are concerned about the price of electricity. The increase in electricity prices has outpaced inflation since 2022, according to a report by the U.S. Energy Information Administration. While most Americans support modernizing and expanding the electric grid, according to a Smart Energy Consumer Collaborative survey, that doesn’t make the surging costs sting any less.

“It’s very hard to reduce the electricity you use in a significant way,” said Vik Patel, managing attorney of the energy and utilities unit of Community Legal Services. “If it's cold outside, you need to have the heater on. Otherwise it can be unsafe. [It’s the] same thing in the summer; you have to have access to cooling.”

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Even if electricity feels unaffordable, it can be difficult for customers to lower their use and, therefore, their bill. But if customers can’t pay their bill, they risk losing power completely.

Last year, about 25,000 households in Philadelphia had their electricity terminated and could not afford to have it restored, according to Patel. “There are a lot of collateral effects when someone's electricity is terminated,” he said. “They can get evicted. [They can] lose custody of their kids.”

What happens next

Data centers and their projected demands on the grid are not the only reason electric bills are increasing, but that has not lessened some residents’ concern about their expansion.

There are already dozens of conventional data centers in Philadelphia, according to Data Center Map, a private company that tracks such facilities nationwide. Two hyperscale campuses are being built in nearby Bucks County and Cumberland County, N.J.

At least four more data centers have been proposed in Chester and Montgomery Counties. These local proposals face a groundswell of opposition from residents who worry about the environmental and financial ramifications of having these hyperscale facilities in their backyard.

Note: Amazon’s 600,000-kW data center is currently under construction in Falls Township, as is the 300,000-kW hyperscale data center in Vineland.

“I don't deny we need to upgrade our grid,” Marx said. “And, quite frankly, more frequent storms are absolutely going to cause more infrastructure costs. But I think there's a lack of transparency in what's necessary and what is nice to have. Who’s it for? Who pays for it and at what expense?”

Staff Contributors

  • Reporting: Charmaine Runes
  • Design and development: Charmaine Runes, Sam Morris
  • Graphics: John Duchneskie
  • Illustration: Glenn Harvey
  • Editing: Sam Morris, Cynthia Henry
  • Copy Editing: Addam Schwartz

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Topics mentioned in this story

UtilitiesJosh Shapiro