Is the AI revolution raising consumers’ utility bills?

Bank of America deposit data reveals a 3.6% year-over-year increase in average electricity and gas payments during Q3 2025, primarily driven by escalating demand for electricity generation capacity and grid investments, partly due to data center expansion. This trend, evidenced by rising electricity capacity auction prices, is expected to exert persistent upward pressure on utility bills. Such increases disproportionately impact lower-income households, posing a significant headwind to consumer spending growth amidst weakening wage trends for this demographic.

Analysis

Bank of America deposit data indicates a 3.6% year-over-year increase in average electricity and gas payments during Q3 2025, suggesting intensifying utility bill pressure. This rise is primarily driven by escalating demand for electricity generation capacity and grid investments, partly fueled by the build-out of data centers, with BofA Global Research noting significant increases in electricity capacity auction prices.

The persistent pressure on peak electricity demand capacity is expected to result in unyielding upward pressure on customer utility bills. This trend disproportionately impacts lower-income households, presenting a significant headwind to overall consumer spending growth, especially as it coincides with weakening wage growth for this demographic.

Key Decisions for Investors

• Investors should monitor consumer spending data, particularly for discretionary categories, as rising utility costs could constrain household budgets.
• Evaluate companies with significant exposure to lower-income consumer segments for potential demand headwinds due to increased essential expenditures.
• Consider the long-term implications of increased electricity demand from AI and data centers on energy infrastructure investments and utility sector profitability.