Energy bill burdens grow
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Why are electricity prices increasing significantly?
Your electric bill is going up, but how much are AI data centers really to blame? Plus, could lowballing yourself help you get a job? From American Public Media, this is Marketplace.
In Washington, I'm Kimberly Adams in for Kyra's doll. It's Thursday, January the 29th. Good to have you along. If you've noticed that your electric bill has been creeping up these past few years, you're in very good company. According to the nonprofit Power Lines, electric and gas utilities asked for permission to increase rates by $31 billion last year. That's double what they asked for the year before. And in most cases, those rate increases were approved.
How much impact do AI data centers have on energy costs?
Marketplace's Sabree Beneshore takes a look at why this is happening.
Osiris Bali lives in Little Rock, Arkansas, and his electric and gas bills are about to explode again.
We're all experiencing this winter storm, and you have no choice but to run the heat all day long, especially if you have children.
Completely aside from the storm, his bills have already been rising.
But this went up, you know. A few hundred dollars over the last few years for gas and electricity here.
He is annoyed that the Public Service Commission keeps approving the utility's rate increases.
A lot of corporate welfare, I'll say.
Every utility market is different, but overall, electricity and natural gas are among the biggest drivers of inflation, according to nonprofit power lines. Charles Hua is executive director.
What factors contribute to rising utility bills beyond data centers?
Utility bills have gone up about 40% over the last five years. It's not just because of data centers, which are geographically concentrated. In fact, in a lot of places, it's not even mostly because of data centers. Our grid is getting old. We're not using it efficiently. So it costs a lot of money just to replace and repair and modernize our grid infrastructure. For years, there was underinvestment in the power grid as a way to keep prices down, according to Thomas Rollins-Reese, head of power market analysis at Bloomberg. Underinvestment in the grid hasn't been a problem because U.S. power demand has been stagnant. U.S. power demand is definitely not stagnant anymore. And the long-delayed upgrade bill is catching up with all of us, he says.
Dan Pickering is co-founder of Pickering Energy Partners.
Demand growth a decade ago was running at about half a percent per year. In the last three or four years, it's ticked up to around 1.5% per year.
Just from population growth, reshoring of industrial activity, and just more things that are electric, like cars. Add on top of that data centers, and demand growth is expected to increase from 1.5% to 2.5% each year. But there's another thing driving electricity and gas costs up. The market price of natural gas, which powers a lot of power plants. Thomas Rowlands-Reese again.
How does aging infrastructure affect energy prices?
There's a bit of an upward trend in natural gas prices right now.
One reason is because new shipping terminals are allowing us to export more of it, leaving less gas here at home and pushing up prices. In New York, I'm Sabree Beneshour for Marketplace.
Wall Street today, not a great day for some tech stocks, just to put it mildly. We'll have the details when we do the numbers.
AI's influence is showing up in lots of different parts of the economy. We got one example this morning when Caterpillar reported profits that beat Wall Street's expectations. Shares of the company that makes all that yellow, heavy construction equipment, formerly of Peoria, Illinois, now of Irving, Texas, those shares are up more than 50 percent over the last year, thanks in large part to artificial intelligence. Marketplace's Daniel Ackerman explains.
Yes, Caterpillar builds excavators and dump trucks, says Kristen Owen, an analyst with Oppenheimer, but there's one component it makes for them that's driving the boom.
When you think about what helps those big machines that we know Caterpillar for, it's large engines.
And lately, the firm is connecting more and more of its engines to electrical generators. Because there's one industry demanding a lot of them these days.
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Chapters
8 chapters
1
Why are electricity prices increasing significantly?
0:01–0:50
2
How much impact do AI data centers have on energy costs?
0:50–1:38
3
What factors contribute to rising utility bills beyond data centers?
1:38–2:58
4
How does aging infrastructure affect energy prices?
2:58–5:10
5
What role does natural gas pricing play in electricity costs?
5:10–9:15
6
How is Caterpillar benefiting from AI infrastructure investments?
9:15–14:46
7
What challenges do job seekers face in a tough market?
14:46–20:09
8
What is direct primary care and how does it change healthcare access?
20:09–25:40