EPRI Study Finds Data Centers Lowered U.S. Power Rates Through 2024

Researchers Asa Watten, John Bistline and Geoffrey Blanford estimate that a doubling of data center capacity reduced residential retail electricity prices by 3.5% for a fixed level of demand. Because the average customer lived in a state where capacity rose about 160% from 2019 to 2024, their model implies an average residential-rate reduction of roughly 6% over that period.

The authors argue that electricity pricing does not behave like a simple commodity market. Utilities recover large fixed costs for generation, transmission and distribution across the kilowatt-hours they sell. Durable new demand can spread those costs across more sales, while new generating capacity may be cheaper than older assets it replaces.

To address the possibility that data centers simply chose states with lower power prices, the paper uses the length of the 1947 interstate-highway plan in each state as an instrumental variable. The reasoning is that later fiber routes followed highway corridors, influencing data center location without being designed around modern electricity prices. EPRI says the results remain consistent across customer classes and several robustness checks.

The authors explicitly limit the finding to a period of comparatively modest expansion. The much larger, faster buildout of hyperscale AI facilities could encounter transformer and turbine shortages, permitting delays, fuel-price effects or other supply constraints that make new capacity more expensive.

Demand durability is another key risk. If utilities build generation and grid infrastructure for projected AI load that never arrives, those fixed costs must be recovered from fewer kilowatt-hours, reversing the mechanism described in the historical data.

For infrastructure planners, the useful conclusion is narrower than the headline debate: large computing loads do not automatically raise or lower household rates. The outcome depends on whether demand is durable, capacity arrives at an affordable cost, and tariffs allocate new infrastructure costs without shifting them to other customers.