Anger over soaring electricity bills is separating winning utility stocks from the losers
American voters increasingly blame Big Tech's data centers for higher utility bills for homes and businesses.
The variable that will decide which power stocks survive the next two years is simple: whether tech companies or consumers pay for the AI build-out.
For two years, the power trade was the stock market's favorite way to own the AI boom without paying Nvidia-sized multiples. Buy anything that generates electricity, the logic went, because every data center needs power and supply is short.
It worked. Independent power producers rerated like technology stocks, and utilities that spent decades as bond proxies suddenly had growth stories.
That blanket logic is now breaking down, with politics as the catalyst.
Voters are angry about electricity bills. Electricity rates rose 7.1% nationally in 2025, according to the Energy Information Administration's measure of average retail revenue per kilowatt-hour, and are expected to keep climbing.
Brookings noted that a poll earlier this year showed a plurality of voters across party lines see data centers as a direct threat to their home energy costs, and both major U.S. political parties have discovered the issue works. Every pending utility rate case between now and the November elections is a potential campaign ad.
Which utility stocks survive the next two years will be decided by whether tech companies or consumers pay for the AI build-out. The market has priced the bottleneck. It has not yet priced who gets stuck with the bill.
The bill arrived. Voters noticed.
PJM is the largest U.S. wholesale power market, covering 13 states and 67 million people. Wholesale power costs across PJM rose 76% year-over-year in the first quarter of 2026. Pepco customers in Washington, D.C. saw bills rise about $21 a month, roughly half of it from capacity costs. The Natural Resources Defense Council estimated PJM households face up to $163 billion in cumulative extra costs through 2033 - around $70 a month for a typical family - if regulators keep spreading data-center costs across everyone's bills.
Then came the elections. In November 2025, Abigail Spanberger won Virginia's governorship in a landslide after promising to make data centers "pay their own way and their fair share." Mikie Sherrill became New Jersey's new governor partly on a pledge to freeze electric rates after a 20% price spike. CNN exit polls found 87% of New Jersey voters considered electricity costs a problem. Georgia, in a race almost nobody outside the state watched, elected two Democrats to the Public Service Commission that sets Georgia Power's rates.
The backlash has since escalated past tariffs. On July 14, New York Gov. Kathy Hochul issued an executive order pausing permit applications that have not yet been deemed complete for new data centers drawing 50 megawatts or more, creating the first statewide moratorium in the country. It runs until regulators finish a generic environmental impact study - or one year, whichever comes first.
The order actually does less than it appears to. What matters is that it happened at all. Both candidates in New York's governor's race are campaigning on electricity costs. Hochul is pausing large data-center permitting; her opponent promises to halve electricity bills while continuing to welcome the industry. Neither is arguing that households should absorb the buildout's costs.
The sorting mechanism
The lesson for every politician facing voters in November 2026 is unmistakable, and legislatures acted on it: More than 300 data-center bills were filed across 30-plus states in just the first six weeks of this year. The bills differ in detail but converge on one principle: data centers pay their own costs.
Oregon's POWER Act, for example, created one of the first statutory frameworks requiring data centers to carry their costs; the implementing tariff that took effect in June raised Portland General Electric's $(POR)$ data-center rates about 29% while cutting residential rates. Similar directives apply in Pennsylvania, Virginia, New Jersey and Texas.
Meanwhile, at the federal level, Amazon.com (AMZN), Alphabet $(GOOGL)$ $(GOOG)$, Meta Platforms (META), Microsoft $(MSFT)$, OpenAI, Oracle $(ORCL)$ and xAI have signed the White House's Ratepayer Protection Pledge, committing to build or buy their own generation and cover infrastructure upgrades. A House bill that would codify parts of that pledge is advancing through committee months before the midterms.
Costs are migrating from ratepayers toward the companies using the power. For investors, that is the entire story, because the shift does not hit every power company equally.
Utilities get the upper hand - or an uppercut
The best-positioned companies are those whose data-center revenue is generated from customers under long-term contracts that involve direct payment. Constellation Energy (CEG), for example, signed 20-year power-purchase agreements with Microsoft to restart the Three Mile Island reactor it now calls the Crane Clean Energy Center, and with Meta for its Clinton plant in Illinois. Vistra (VST) signed 20-year agreements with Meta in January covering roughly 2.6 gigawatts from its nuclear plants in Ohio and Pennsylvania. Talen Energy $(TLN)$ sells nuclear output from its Susquehanna plant to Amazon under a contract running into the 2040s.
These are examples of a Big Tech hyperscaler contracting directly for power. The power company's core revenue does not depend on persuading residential regulators to approve higher bills every two years. These deals are the corporate version of the policy states are now writing into law: The tech company pays.
The vulnerable names are regulated utilities whose growth plans depend on regulators and voters approving higher household bills while the company builds for Big Tech.
The scale of what is being asked is remarkable: according to the utility-regulation nonprofit PowerLines, utilities requested $31 billion in rate increases in 2025, more than double the prior year, and another $9.4 billion in the first quarter of 2026 alone, with nearly half the 2025 requests still unresolved. At the same time, profits across a sample of 110 for-profit utilities rose from just under $39 billion in 2021 to more than $52 billion in 2024 - a statistic already appearing in campaign speeches.
The political concern is visible in many companies' behavior. Exelon's $(EXC)$ PECO subsidiary withdrew its rate-increase request after stakeholders told management that, given affordability concerns, the timing was wrong. DTE Energy $(DTE)$ offered Michigan a two-year pause in further rate requests, contingent partly on a giant Oracle-OpenAI data center coming online, an offer the state's attorney general compared with a "ransom note." Indiana Gov. Mike Braun appointed a new slate of utility commissioners with an explicit mission to face down rate increases, while Arizona Attorney General Kris Mayes is challenging two utility rate requests.
Each is a data point in the same trend: The regulated-utility model's core assumption, that approved capital spending can be recovered from ratepayers while earning a return commonly near 10%, has become a campaign issue.
A utility whose data-center customers are contractually obliged to pay whether or not they draw the power is structurally safer than one still socializing costs through general rates. The corollary is worth stating plainly, because it cuts against the easy version of this story: A data center is not automatically a burden on other ratepayers. Where a grid has spare capacity and the customer is locked into paying for what it reserved, fixed costs can be spread across more consumption, holding rates down. It becomes a liability when utilities build ahead of speculative demand into a capacity-constrained market without those protections.
A five-part test for utility stocks
Companies that score well are effectively selling power to AI. Companies that score poorly are carrying its political liability.
-- Is new generation and transmission funded by contracted customers or by the general rate base?
-- Does the utility's large-load tariffs include minimum-demand payments, collateral and exit fees? Or can data-center customers walk away and leave ratepayers holding the bag?
-- Where does the utility operate? A utility in a PJM state with competitive 2026 political races faces a much different regulatory climate.
-- How much of the company's five-year capital plan assumes rate-case approvals that have not been granted?
-- How much of the company's projected data-center demand is contracted rather than speculative?
Companies that score well on this test are effectively selling power to AI. Companies that score poorly are carrying its political liability.
Jurica Dujmovic is a MarketWatch columnist.
More from Jurica Dujmovic:
As Big Tech's power demand surges, data centers bring utilities a huge new profit center
Nvidia is betting on a trillion-dollar robotics boom. Here is the hidden way to trade it.
Meet the Nvidias of power - 5 stocks winning Big Tech's $700 billion AI energy grab
-Jurica Dujmovic
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(END) Dow Jones Newswires
July 27, 2026 07:43 ET (11:43 GMT)
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