US manufacturers in Rust Belt cities served by PJM Interconnection are paying significantly higher electricity costs as AI data center energy demand strains the largest power grid operator in the United States. The cost increases stem from growing data center power requirements that have driven PJM capacity prices from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026, according to Reuters analysis. The resulting profit margin squeeze for steelmakers and brick factories creates tension with President Donald Trump's Made in America manufacturing revival plan while Trump simultaneously champions the tech companies driving the AI data center boom.
Belden Brick Monthly Electricity Bills Rose from $1,600 to $12,000
Factory electricity bills are rising faster than those for other business customers or residential customers in the 13-state region served by PJM Interconnection, according to Reuters analysis. The Belden Brick Company, a 141-year-old brick manufacturer in Ohio, saw monthly electricity bills soar from $1,600 to $12,000 due to higher monthly capacity charges. The capacity charge increases reflect PJM's mechanism for compensating power generators based on supply and demand forecasts across its territory.
Steel Industry Faces Tens of Millions in Additional Annual Power Costs
The Steel Manufacturers Association warned that US steel companies concentrated in the Rust Belt region served by PJM Interconnection are paying tens of millions of dollars in higher power costs per year. Electricity accounts for 20 to 40 percent of total production costs in steelmaking. The Ohio-based steelmaker Metallus reported electricity costs jumped 70 percent since 2024, leading the company to pay an extra $15 million in energy costs annually, according to the Wall Street Journal.
Each electric arc furnace used in steelmaking has an operating power load between 40 and 200 megawatts. The entire US steel industry draws up to 11 gigawatts of power at peak production across all facilities.
Data Center Construction Requires 1 Million Tons of Steel Annually
US steelmakers have benefited from data center construction's requirements for an estimated 1 million tons of steel per year. However, data center energy demand has simultaneously driven up operating costs for the US steel industry, according to the Wall Street Journal. Many states in PJM territory have attracted large AI data center projects with substantial electricity needs, contributing to the capacity price increases.
FAQ
How much did PJM capacity prices increase between 2024 and 2026?
PJM capacity prices rose from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026, according to Reuters reporting. This increase reflects growing electricity demand from AI data centers in the 13-state region served by PJM Interconnection, the largest power grid operator in the United States.
What percentage of steel production costs does electricity represent?
Electricity accounts for 20 to 40 percent of the total production costs of making steel, according to the Steel Manufacturers Association. Each electric arc furnace used in steelmaking operates with a power load between 40 and 200 megawatts, and the entire US steel industry draws up to 11 gigawatts at peak production.
