The rapid expansion of data centers, driven by demand for artificial intelligence, is causing a significant increase in electricity costs for manufacturers in the American industrial heartland. These rising expenses are putting pressure on long-standing companies, some of which are struggling to absorb the higher bills.
Belden Brick Company, a 141-year-old family-owned business in Sugarcreek, Ohio, has experienced a 90 percent increase in its electricity costs. The company's monthly capacity charge fees have jumped from approximately $1,600 to $12,000. This surge has led Belden Brick to raise its prices by 4 percent, yet profits continue to decline. Brad Belden, the company president and a fifth-generation owner, expressed concern that without mitigation, many manufacturers may find it impossible to cope with escalating power costs.
This situation is not unique to Belden Brick. Manufacturers across the Midwest are facing higher electricity bills, which represent one of their largest operational expenses. According to a review of U.S. energy data and interviews with industry experts, these increases are outpacing those for residential consumers and other businesses. A single data center can consume as much electricity as a mid-sized town, and the proliferation of these facilities is straining the nation's power grid.
Rising Capacity Charges
A primary driver of these increased costs is the spike in capacity charges. These fees are designed to ensure sufficient electricity is available during peak demand periods and to incentivize new power generation. While capacity charges typically constitute about 10 percent of a residential electricity bill, they can account for up to three times that share for manufacturers. These charges have surged across the 13-state region served by PJM Interconnection, the nation's largest power grid operator, as demand from data centers has outpaced new power supply. PJM's benchmark rate for capacity has risen dramatically, from $28.92 per megawatt-day in 2024 to $329.17, an increase of over 1,000 percent, largely due to data center demand.
The impact is evident in industrial power prices. Average industrial electricity prices in Pennsylvania and Ohio jumped 31 percent and 26 percent, respectively, in the year through December 2025, far exceeding the nationwide increase of 7 percent. For manufacturers operating on thin margins, even seemingly modest increases can jeopardize their ability to continue operations.
Regulatory and Policy Challenges
Federal, state, and local officials are under pressure to manage these rising costs and ensure grid reliability. However, some proposed solutions aimed at making technology companies bear more of the financial burden could inadvertently affect smaller manufacturers. The Federal Energy Regulatory Commission is considering new rules that would require large energy users to pay transmission charges on both grid-sourced power and electricity generated on-site. Manufacturing groups are advocating for exemptions, arguing that these proposals unfairly target factories alongside data centers, which have vastly different energy consumption patterns.
States are also exploring new regulations to curb data center electricity demand. Industry groups warn that manufacturers could end up bearing the cost of these measures. Manufacturers argue that they should not be subject to regulations designed to manage the energy needs of data centers. In Ohio, Belden Brick is urging regulators to scrutinize utilities' projections for data center energy demand and is exploring options such as on-site power generation to mitigate its own rising bills.
The growing demand for electricity from data centers is occurring as some initiatives aim to revive American manufacturing. Industry advocates and policy experts note that the rising energy costs and regulatory uncertainty pose a threat to the viability of factories. Data center industry representatives, however, argue that this expansion is driving necessary investment in the aging electric grid and that soaring costs are also influenced by power plant retirements and transmission bottlenecks. The collision between the energy needs of burgeoning tech infrastructure and traditional manufacturing is creating significant economic challenges in regions like the Rust Belt, where five of the nation's eight emerging data center hubs are located.