What AI data centers are doing to your electric bill

Planet Money investigates the rising electricity prices experienced by a retired couple in Ohio, exploring the impact of increased data center construction and AI development on energy costs. The investigation traces the price increases through three layers of the electricity market: distribution, transmission, and generation. While new rules for data centers have been implemented at the local distribution level, and transmission costs play a role, the biggest factor is the dysfunctional capacity market, designed to ensure future power supply, but which is failing to incentivize new power plant construction and is instead driving up costs for consumers. The episode highlights how the surge in demand from data centers is straining the electricity system, leading to increased bills and potential chaos in the energy sector, with various proposed solutions and federal intervention being considered.