A report by the Institute for Energy Research takes issue with the increasingly common contention that data centers lead to higher electricity costs.

“The latest data from the Energy Information Administration on electricity prices and sales contradict the narrative that data centers are driving up electricity prices,” IER argues. “That may change in the future, but the most recent data shows that data centers are not responsible for higher electricity rates.”

IER clarifies that there is no statistically significant correlation between the number of data centers in a state and its current electricity prices. “In fact, prices in the top 10 data center states are virtually identical to the average across other states,” IER finds. “Furthermore, there is no statistically significant relationship between data center concentration and faster increases in electricity rates.”

The institute acknowledges that data centers increase electricity demand. It cites the Lawrence Berkeley National Laboratory, which estimated in 2024 that data center electricity consumption rose 131% from 2018 to 2023.

“Company disclosures show similar growth at the facility level,” IER shares. “Meta’s metered data-center consumption rose from 6.97 TWh in 2020 to 18.06 TWh in 2024 (up 159%), with major campuses in Oregon, Iowa, and Nebraska more than doubling.”

To assess whether this rapid demand growth has led to higher electricity costs, IER says it compared electricity price and sales data for all 50 states with state-specific data center counts for 2025.

The Results

IER determined that the number of data centers does not correlate with current electricity prices; they have a Pearson r of -0.053 (p = 0.72). “This is essentially zero correlation and not significant. States with many data centers don’t have higher or lower electricity prices than states with few data centers,” IER writes.

“In fact,” it continues, “the top 10 data center states (Virginia, Texas, California, Illinois, Ohio, etc.) average 14.46 cents/kWh in 2025, virtually identical to the 14.39 cents/kWh average for all other states. This makes some intuitive sense, as data centers actually seek out states with cheap, reliable power.”

IER also investigated whether data centers accelerated price increases. “There’s a slightly positive but still statistically insignificant relationship between data centers and fast price increases,” it says.

For the 10 states with the most data centers, rates increased 36.3% from 2010 to 2025, while prices in other states rose 28.1% for a t-test p of 0.144. Narrowing the date range to 2021 to 2025, the rate increase for the top data center hosts was 26.5%, whereas other states saw prices rise 21.1% for a t-test p of 0.228. IER says neither t-test p qualifies as significant.

The Rationale

The small difference in rate growth between the top data center hosts and other states may come partly from high sales volumes offsetting fixed costs. “Across all 50 states, states where electricity sales grew faster from 2015 to 2025 paid less, not more, for electricity. States where sales declined paid dramatically more,” IER reports.

To illustrate this trend, IER divides the states into two groups: high-growth states, where sales grew more than the median, and low-growth states, where sales grew slower than the median. From 2015-2025, high-growth states’ electricity prices moved up an average of 20.0%, while low-growth states saw an average increase of 39.4% (t-test p < 0.0001). This pattern holds from 2021-2025, with high-growth states seeing 15.9% increases and low-growth states’ increase almost twice as high at 28.5% (t-test p = 0.0002).

“The state-level examples are stark,” IER says. It explains that the five states with the largest sales declines from 2015 to 2025—California (−9%), Maine (−7%), Connecticut (−6%), Massachusetts (−5%) and Hawaii (−4%)—endured an average price increases of 58%.

Meanwhile, the five states with the fastest electricity sales growth—North Dakota (+67%), New Mexico (+37%), Texas (+32%), Oregon (+30%) and Virginia (+29%)—experienced average price increases of 13%.

“The intuition behind this result is straightforward,” IER says. “Electricity grids entail high fixed costs, transmission infrastructure, and generation capacity, as well as long-term contracts that must be recovered regardless of how much power flows through them. When sales grow, those fixed costs are spread across more kilowatt-hours, holding per-unit rates down. When sales fall or stagnate, the same fixed costs are recovered from a shrinking base, pushing rates up.”

IER’s full report includes more details on the statistical correlations discussed above and two U.S. maps: one that compares the number of data centers in each state to current electricity rates, and another that looks at how quickly those rates are increasing. To view those maps, see Have Data Centers Driven Up Electricity Prices? The State-Level Data Don’t Support the Narrative.