For years, the electricity costs for Belden Brick, a brick manufacturer in Sugarcreek, Ohio, remained relatively stable. However, last year, they surged by 90%, with the primary driver being a massive increase in local electricity demand from data centers.
This company, with a 141-year history, supplies bricks for iconic structures like the Alamo in Texas and the University of Notre Dame. The sharp rise in its power bill is largely due to a monthly capacity charge, which recently jumped from $1,600 to $12,000 per month.
This situation at Belden Brick is a single example of a widespread cost pressure facing numerous manufacturing firms across the U.S. interior. The proliferation of power-hungry data centers, which service the artificial intelligence industry, is a key factor.
An analysis of U.S. energy data and interviews with over a dozen manufacturers and industry associations reveal that industrial electricity rates, a core operational expense for factories, are rising far more sharply than rates for residential and general commercial customers.
In response to public discontent and to ensure grid stability, federal, state, and local governments are pushing for large technology companies to bear more of the cost for their enormous power consumption. However, some policy proposals group small factories together with tech behemoths like Meta Platforms, Inc. and Amazon, whose power needs can be 50 times greater, forcing them to share grid upgrade costs uniformly.
Meta Platforms, Inc. declined to comment on the matter; Amazon did not respond to requests for comment.
Understanding Capacity Charges
This fee compensates power generators for the fixed costs of ensuring the grid can meet peak demand and for adding new supply capacity. According to factory operators, lawyers, and energy experts interviewed, capacity charges typically make up only about 10% of a residential customer's total bill, but for manufacturing firms, this expense can be up to three times higher.
Within the PJM Interconnection grid, which manages power across 13 states, capacity charges have skyrocketed. The root cause is stagnant growth in power supply coupled with voracious demand from data centers—a single server farm can consume as much electricity as a medium-sized town.
"The increase in that capacity charge line item is staggering," said Brad Belden, the company president and fifth-generation leader.
Even with these significantly higher capacity charges, the PJM grid was forced to implement emergency measures last week, asking some customers to reduce usage to avoid rolling blackouts as high temperatures pushed demand toward peak levels.
Industry groups and policy experts warn that persistently high electricity prices, combined with regulatory uncertainty, threaten the survival of many factories at a time when U.S. policy emphasizes bolstering domestic manufacturing. Many manufacturers are being forced to plan price increases, slow expansion, and some are even considering relocating their operations.
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