Electricity costs that had been steady for decades at some Rust Belt plants have flipped into a major and growing expense as large-scale data centers proliferate nearby.
Belden Brick Company in Sugarcreek, Ohio, a 141-year-old brick maker whose products are used in notable structures such as the Texas Alamo and Notre Dame University, saw its power bill spike by roughly 90% last year. The jump was driven largely by a change in the monthly capacity charge that the company pays: the fee rose from $1,600 a month to $12,000.
Belden is one of numerous manufacturers across the industrial Mid-Atlantic and Midwest regions that have recorded faster electricity cost growth than many households and nonindustrial businesses, according to U.S. energy data and interviews with nearly a dozen manufacturers and industry advocates. The steep increases in manufacturing power bills coincide with the arrival of energy-intensive data centers built to serve the artificial intelligence industry.
Capacity charges are intended to compensate generators for the expense of ensuring there is enough power to meet peak demand and to encourage building new generation. While these fees typically represent about 10% of a residential bill, manufacturers often face capacity charges that are up to three times that share, industry participants and energy experts said.
In the 13-state territory served by PJM Interconnection, capacity-related fees have soared as supply has failed to keep pace with surging demand from data centers. One server warehouse can use as much electricity as a mid-sized town, a scale that has changed the balance between long-standing industrial users and new large digital loads.
"That capacity charge just jumped off the page," said company president Brad Belden, who is part of the fifth generation at Belden Brick.
The capacity-charge increases come amid broader strain on the grid. Last week PJM said it took emergency measures, including asking some users to curb electricity consumption, to avoid rolling blackouts when extreme temperatures pushed peak demand to a record high.
The combination of faster-rising energy costs and regulatory uncertainty is prompting concerns about the viability of some factories. Advocates and policy experts said that the timing of these pressures matters, coming as the federal government has emphasized domestic manufacturing. Some companies are responding by raising prices, slowing expansion plans, or exploring relocation. Belden raised brick prices by 4% but reported smaller profits after the increase.
"There are going to be some companies that are on the razor's edge," Belden said, describing how continued higher bills could exhaust firms' options for cost cutting and price increases.
The White House provided a statement noting actions taken by the administration, highlighting a tech industry "ratepayer protection pledge" hosted earlier in the year and directives to develop additional power plants in PJM territory that would be financed by technology firms.
Representatives for the major technology companies contacted for comment did not respond. Meta declined to comment. Amazon did not return a request for comment.
Data center industry groups contend that the expansion is prompting long-delayed investments in the U.S. power system and that other forces are also raising costs, including retirements of power plants and transmission bottlenecks. "Data-center growth is making us finally grapple with the difficult decisions that we were always going to have to face," said Aaron Tinjum, vice president of energy for Data Center Coalition.
PJM is the largest grid operator in the United States and spans a manufacturing belt that runs from New Jersey to northern Illinois and reaches as far south as Tennessee. Developers have been drawn to the region, and five of the eight U.S. states considered emerging data center hubs are in the Rust Belt, according to Synergy Research Group data cited by industry participants.
PJM sets capacity prices that are paid to power generators based on forecasted supply and demand. Those capacity prices have risen precipitously as data center load increased faster than new generation could be built. PJM's capacity price moved from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in the current period, a 1,038% increase, figures from PJM cited by industry sources show.
That escalation in capacity costs has been reflected in industrial electricity pricing in states that are both manufacturing centers and data center destinations within PJM's footprint. Using U.S. Energy Department data, calculations show average industrial electricity prices rose 31% in Pennsylvania and 26% in Ohio as of December 2025 compared with twelve months earlier. By contrast, industrial customers nationwide saw an average increase of 7% over the same period. Residential customers in Pennsylvania and Ohio experienced price increases of 14% and 9%, respectively.
Even relatively small percentage increases in power costs - for example a single-digit rise - can strain factories that operate on tight margins and are energy intensive. "This can have short- and long-term impacts on whether or not these facilities can continue to operate," said Paul Cicio, president of the trade group Industrial Energy Consumers of America.
The pressure from capacity charges is visible in concrete company-level effects. At Plaskolite, a plastics manufacturer with facilities in Pennsylvania and Ohio, capacity fees climbed to $1.2 million annually from $200,000 a year earlier. The company is weighing options including shifting to a direct natural gas feed to power its facilities instead of relying solely on the grid, said Timothy Ling, Plaskolite's senior environmental director. "Electricity has become the highest-drama form of energy," Ling said.
Grove City, Ohio-based Tosoh SMD, which makes materials used in the electronics industry, is considering altering production schedules to shift more output into the overnight hours when electricity tends to be cheaper and labor is more difficult to staff. "We’re trying to be as creative as possible just to maintain competitiveness," said John Holeman, director of facilities and maintenance at Tosoh.
Policymakers are grappling with how to shield residential consumers and small businesses from sharp price spikes while dealing with the implications of large commercial loads such as data centers. Current rate classifications can put manufacturers in the same category as data centers for electricity rates, exposing them to the effects of measures intended to manage data center demand.
The Federal Energy Regulatory Commission is weighing a proposal to require very large energy users that operate with onsite generation to also pay transmission charges for that self-generated power drawn from the grid. The proposal aims to ensure the grid retains sufficient supply if onsite generation fails. Manufacturing groups are seeking exemptions from this change; FERC declined to comment.
At least ten U.S. states have proposed rules to manage data center electricity demand, but details of those state-level proposals could also affect manufacturers, according to analyses by the Smart Electric Power Alliance and the North Carolina State University's NC Clean Energy Technology Center.
"Manufacturers are not data centers. We should not be impacted by their effort to manage data centers," said Paul Cicio, underscoring concerns that broad regulatory efforts might sweep industrial users into new cost structures intended to govern tech-sector loads.
Some manufacturers are asking state regulators to scrutinize how utilities estimate data center electricity demand and are pursuing their own measures to reduce exposure to volatile grid charges. Installing onsite generation and other alternatives are being evaluated as ways to lessen reliance on external capacity markets and the transmission system.
"You start to look at alternatives," said Brad Belden, who is assessing options such as adding onsite power generation at his brick plant. "Manufacturing goes as power goes."
Summary
Manufacturers in the PJM power region are experiencing sharply higher electricity bills, largely driven by soaring capacity charges tied to rapid data center growth. The mismatch between data center demand and available generation has pushed PJM capacity prices up more than 1,000%, prompting some factories to consider price increases, operational shifts, or investments in onsite power to maintain competitiveness.
Key points
- Capacity charges in PJM have risen dramatically as data center demand outpaces generation additions, with PJM's capacity price increasing from $28.92 to $329.17 per megawatt-day, a 1,038% climb.
- Industrial electricity prices in Pennsylvania and Ohio rose faster than the national industrial average, increasing 31% and 26% year-over-year as of December 2025, respectively; residential increases in those states were 14% and 9%.
- Manufacturers are exploring responses such as raising product prices, shifting production to cheaper hours, installing onsite generation, or seeking regulatory relief to mitigate rising power expenses.
Risks and uncertainties
- Rising electricity costs could threaten the financial viability of energy-intensive manufacturers, potentially leading to slowed growth, layoffs, or relocation - a risk concentrated in heavy manufacturing and related supply chains.
- Regulatory proposals intended to protect residential consumers and small businesses from data center-driven spikes may inadvertently impose higher costs on manufacturers if they remain in the same rate class as data centers; this could affect industrial competitiveness.
- Grid reliability remains uncertain as demand peaks rise; PJM has already resorted to emergency measures to avoid rolling blackouts, indicating potential for further operational constraints that would impact both manufacturing and commercial loads.