STEVE INSKEEP, HOST:
A Florida man named Al Salvi noticed something recently. The electricity bills are rising in Pembroke Pines. And he told our colleague, Scott Horsley, that he pays up to $500 per month.
AL SALVI: Seniors down here that are living check to check, now we've got to decide whether we're going to pay electric bill or we're going to buy medication.
INSKEEP: Why is this happening? We called Robinson Meyer, who is executive editor of the climate and energy site Heatmap News. Welcome to the program.
ROBINSON MEYER: Thank you for having me.
INSKEEP: OK, so we hear politicians say that higher electricity prices are about the kind of energy we use, fossil fuels versus renewables, whatever fits their agenda. But it seems you've been focusing on some other factor in electricity prices. What is it?
MEYER: That's right. So I think the biggest driver of the run-up in electricity prices we've seen over the past four or five years, because electricity prices really shot up since the pandemic - they've been rising twice as fast as overall inflation - is the grid itself. And not only the grid itself, it's actually the most local part of the power grid, like that last mile from substations to your house or business.
INSKEEP: I don't automatically get that because the wires are already there and have been there for generations. Why would that get more expensive?
MEYER: In some cases, it's because they've had to be rebuilt because of a natural disaster. And in some cases, they are just getting old. It's actually exactly the fact that they've been there for generations. They're getting old and they need to be replaced. And in some cases, it's because maybe a wildfire burned through an entire area, especially out west. And now the utility has to go in, and not only does it have to rebuild that grid in the local area, it also has to rebuild it in a way that's not as likely to cause a wildfire in the future.
INSKEEP: This is sounding like an unseen cost of climate change.
MEYER: It is, I think, a cost of climate change. I mean, I think it's just that we've had the grid for a long time. I mean, in many places, it's 90 or 100 years old. And it's time for those systems to be replaced. And unfortunately, they're beginning to be replaced at the same time as we're seeing rising electricity demand for the first time in the U.S. in basically a generation.
INSKEEP: What is increasing the demand for electricity?
MEYER: So it's a few things. I think the headline driver is this boom in data center construction and AI, of course. And that is having big effects in certain parts of the country. The other things driving electricity demand are population growth and economic growth. You know, people are getting richer and they're using more electricity. There are people switching to EVs. You know, if you think about going from gasoline to EVs, you got to plug in your car. And then the last thing is something that I think everyone across the political spectrum wants to see, which is more U.S. manufacturing. As factories have gotten built here, that drives higher power demand, too.
INSKEEP: Is it inevitable then that as AI expands, and if the U.S. succeeds in reshoring some manufacturing that I'm just going to pay more and more for electricity?
MEYER: Well, it shouldn't be. And this is one dynamic that I think regulators and state leaders are grappling with right now. In the New Jersey governor's race, electricity prices have become a huge deal. And while I don't think electricity prices are increasing in most areas right now because of AI, I do think there is a good case that AI is driving some of the electricity prices in New Jersey specifically, and data centers specifically. Historically, kind of the way it's worked is that the utility builds out the grid to meet demand from everyone. And then everyone kind of foots the bill for that expansion. I think right now, given that just a few customers are driving so much more electricity demand, utilities and states are trying to figure out how we can, you know, meet that demand while not having absolutely everyone else pay much higher cost to build the infrastructure needed to service those facilities.
INSKEEP: Robinson Meyer of Heatmap News, thanks so much.
MEYER: Thank you for having me.
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