Post 64: Regulating Micromobility

 My decision to write an article on this topic was partially a result of a recent event less than six miles from my house.  A 10-year old boy was riding an e-scooter on a moderately busy street when he decided to cross mid-block from one side to the other.  He was struck by a car whose driver did not anticipate his actions and the boy suffered a significant head injury despite the fact that he was wearing a helmet.  His injuries led to his death a few days later.  After a police investigation, the driver of the car was found innocent of any wrong-doing.

It turns out that the micromobility world (e-bikes and e-scooters) has a dark side.  The growing popularity of electric bikes and scooters is being accompanied by a growing concern about their safety and their impact on other forms of transportation.  Unfortunately, hard data is hard to come by but anecdotal evidence is piling up.  Doctors at Penn State Health Children’s Hospital, for example, treated more kids injured in micromobility related accidents in the first 10 months of 2025 than in the three previous years combined. [1]  Social media posts showing riders weaving in and out of traffic, doing “wheelies” at high speed, or ignoring stop lights and traffic signs are commonplace.  Such behavior puts both pedestrians and vehicular drivers on edge and undoubtedly contributes to accidents both trivial and serious.

The result is that city halls across the country are being flooded with complaints asking city leaders and police departments to take action.  Some of those actions have been well-reasoned responses while others have been knee-jerk over-reactions.  Micromobility laws already varied fairly widely on a state-by-state basis, but with new local regulations layered on top, the result is threatening to become an indecipherable mish-mash.  My goal with this post is to suggest ways that micromobility can coexist with other forms of urban transportation and to suggest a general framework within which logical regulations could be developed if needed.

I approach this subject as an owner and regular user of both an e-bike and an e-scooter (although I have come to prefer my e-bike).  I also drive a car on an almost daily basis, and I take mass transit on an occasional basis.  I do have a bias, however.  I firmly believe that cities function most effectively when a wide variety of transportation options are available, so I am not going to argue that cars or bikes or buses should be predominant.  Cities need to figure out how to be multi-modal.

The problems posed by micromobility devices are not really new.  The same problems have existed for years with traditional bikes and, more recently, skateboards.  But for some reason, adding an electric motor has made the issues significantly worse.  I’m going to focus on e-bikes and e-scooters but much of what I suggest applies to traditional (or analog) forms of personal transportation as well.

Understanding Transportation Scale

Much of the problem stems from the fact that we squeeze a variety of transportation modes into a generic street design with limited space.  While there are streets with clearly separated pedestrian sidewalks, bike lanes and traffic lanes, they are relatively rare.  Some streets don’t even have sidewalks, which means that everything happens on the street pavement in some form of transportation free-for-all.  To make matters worse, streets can also be used as parking areas and, occasionally, playgrounds.

Here is rough description of the differences in speed and scale (using weight as a proxy for size) between common transportation users on an urban street:

• A mother pushing a stroller:  2-3 mph, 130 - 180 lbs

• An adult walking for exercise: 3-4 mph, 120 - 200 lbs

• A 10-year old riding a traditional bike:  6-10 mph, 80 - 110 lbs

• A 12-year old on an e-scooter:  8-15 mph, 90 - 120 lbs

• A 15-year old riding an e-bike:  12-25 mph, 160 - 180 lbs

• An adult commuting on a traditional bike:  12-20 mph, 180 - 220 lbs

• An adult on an advanced e-scooter:  15-25 mph, 200 - 250 lbs

• An adult on an advanced e-bike:  15-30 mph, 210-260 lbs

• An adult(s) in a car:  25-45 mph, 3,000 - 4,000 lbs

There are two points I’m trying to make with this list.  The first is that we routinely put transportation users of vastly different scale and speed in very close proximity to one another.  This requires that we trust the other users to act in predictable ways that roughly follow an agreed upon set of “rules of the road” so that we are not constantly running into one another.  Most of these rules are codified as traffic laws, but many are simply expectations about what others are likely to do.  The second point is that simply adding a battery and electric motor to a bike or kick scooter suddenly ups their speed by 50 percent or more, and makes them so convenient to use that their popularity has exploded.  This is particularly true among pre-teens and teenagers who can’t drive.  E-bikes and e-scooters have provided not only increased mobility, but also independence from parents (and parental oversight).

Although an e-bike can go significantly faster than a traditional bike, it doesn’t become more visible to other drivers, the judgement and decision-making of the rider doesn’t suddenly improve, and the maneuverability of the bike actually declines because of its greater speed and weight.  Combine that reality with the fact that most kids under 15 years of age have no clue about the rules of the road, and this is a recipe for accidents on a routine basis.

Not All Micromobility Devices Are the Same

Regulations generally begin by defining the thing being regulated.  Unfortunately, the first problem facing anyone trying to develop reasonable regulations is that the generic terms “e-bike” or “e-scooter” cover a wide variety of vehicles.  Consequently, requirements that treat all e-bikes or e-scooters the same run the risk of being overly broad or even nonsensical.  There is a classification system for e-bikes – although I don’t think it is all that useful – but there is no equivalent system for e-scooters.

Car and Driver magazine recently tested eight e-scooters from popular manufacturers looking for the “best” e-scooter for 2026. [2]  Included in the test was the Segway Ninebot E2 Plus which has a top speed of 15 miles per hour, a range of 10 miles, and a weight of 34 pounds.  The E2 Plus can be purchased from WalMart for roughly $320.  Also in the test was another scooter from Segway, the SuperScooter GT2 which has a top speed of 41 miles per hour, a range of 26 miles and a weight of 117 pounds.  The SuperScooter can only be purchased from Segway, and it comes at a price of approximately $2,700.  Although on the surface they look similar, the operational characteristics are so different that they are going to appeal to a very different customer base and be used in very different ways.  As a result, regulations that treat them the same – not to mention the dozens of other scooters that fall on the spectrum in between these two – are unlikely to make much sense.

Segway E2 Plus
Range: 10 miles; Speed 15 mph

In theory, the 3-class system developed by PeopleForBikes (an advocacy group) in conjunction with the bicycle industry should make things better with respect to e-bikes.  It does, for example, make it easier to distinguish e-bikes from state licensed vehicles such as mopeds and motorcycles.  Beyond that, however, I am sceptical of its value.  The system, in a nutshell, works like this:

• Class 1:  pedal-assist only (no throttle), max assisted speed = 20 mph

• Class 2:  pedal-assist and/or throttle, max assisted speed = 20 mph

• Class 3:  pedal-assist only, max assisted speed = 28 mph

This system sounds at least moderately useful if the goal is to limit speed (e.g. no class 3 bikes) or if the goal is to limit throttle-based bikes (e.g. no class 2 bikes).  Unfortunately, there are three significant problems.  First, there is a lot of rule-bending when it comes to class 3 e-bikes.  Many bikes are sold as class 2 e-bikes with a throttle that is software-limited to a maximum assisted speed of 20 miles per hour.  They are specifically designed, however, to be “switchable” to class 3 simply by changing a system setting and the internet abounds with tutorials on how to bypass the throttle limits so that the bike can reach 28 miles per hour (or more) without any pedaling involved.  To make matters worse, some manufacturers simply ignore the class rules altogether and sell throttle equipped bikes that can top 30 miles per hour without any modifications.

Bandit X-Trail Pro
Dual Motors; Top speed 42 mph

Second, many e-bike owners are unclear on exactly what class of bike they own partly because of the whole “switchable” design thing and partly because many bike shops don’t tell buyers about the classification system.  I found out that my e-bike was class 1 only because the bike had an identifying sticker and I took the time to look up what it meant online.  The result is that regulations based on e-bike classes are likely to confuse many e-bike owners.

Third, aside from the existence of a throttle or not, most law enforcement personnel have no way to field verify what class a particular bike is in.  Many class 1 and class 3 bikes are virtually indistinguishable from each other, and switchable designs can make class 2 bikes operate in ways that are legal in some situations and then clearly illegal when police officers aren’t looking.

Bans Are Not The Answer

Some communities – mostly small, suburban cities – have banned electric bikes and scooters entirely.  This is a ridiculous decision to make, in my opinion.  Imagine banning cars in 1910 because they were startling the horses.  The micromobility genie is out of the bottle and bans are a lazy approach to the problem that labels a city as being backward in their transportation policies.  Any new technology is disruptive, but the better approach is to develop ways to adapt and integrate the new technology, not ban it.

Several studies have shown that the spread of micromobility options has a variety of benefits:  less traffic congestion, less air pollution, less land lost to parking lots, less money spent on transportation costs, and less time stuck in traffic jams. [3]  Most importantly, however, is that micromobility has dramatically improved transportation options for the segments of the population that cannot afford a car or are unable to drive.  E-bikes and e-scooters are far faster than walking, offer more flexibility than traditional transit services, and are far less expensive than taxis or Ubers.

A Better Regulatory Framework

A smarter approach to micromobility regulation is to focus more on the behavior of the rider and less on the physical vehicle.  This is consistent with how other traffic regulations are enforced.  The traffic laws don’t vary for minivans versus sports cars, they focus on whether the driver is speeding or running red lights.  Similarly, cities should focus on the behaviors they find dangerous or threatening and craft ordinances that make those behaviors illegal.

There are, however, some regulations that could apply to all electric bikes and scooters which I feel should be considered at the state level.  For example, should there be a minimum age requirement for using either e-bikes or e-scooters in the public right-of-way (roadways and public sidewalks)?  In my opinion, the answer is “yes” and the minimum age should be at least 13 or 14 years of age.  Should helmets be required?  Again, my opinion is “yes”, at least until the age of 16 or 18.  I would also support some type of rider registration if it can be done online with minimal cost.  The value of this step is to require riders to verify their age and their familiarity with at least the basic rules of the road.  It would give law enforcement personnel some field-accessible data about the rider and it would prevent the “I didn’t know” excuse if riders broke traffic laws.  Finally, the state should clearly define what is an e-bike and what should be treated as a licensed moped or motorcycle.  In my mind, anything with an assisted speed over 28 miles per hour does not belong in the e-bike category.

Having just outlined a role for state-level regulations, I want to point out the need not to go overboard.  New Jersey, for example, recently rushed a bill into law that is being called the “most restrictive e-bike law in the country.” [4]  It requires that all e-bike riders be at least 15 years of age, with some form of drivers license, and that all e-bikes be registered with the state.  In addition, class 2 and 3 e-bikes must be insured.  These requirements are a significant burden on the people who are most dependent on e-bikes for transportation and do relatively little to actually improve safety.  In my mind, this is just a way to disincentivize e-bike usage.

Before any local regulations are crafted to go on top of state regulations, cities need to think about their transportation priorities, including their commitment to building streets that are safe for multiple modes of travel.  For example, it is my opinion that enabling safe and convenient walking should be considered sacrosanct in virtually every city.  Too many cities (or at least portions of cities) have been designed to make walking subservient to the automobile.  Major progress has been made in remedying that situation by improving crosswalks and sidewalks, and slowing down vehicular traffic in key locations.  I would hate to see that progress upended by allowing e-bikes and e-scooters to terrify pedestrians.

At the same time, micromobility options have become such a crucial transportation option that cities need to make sure they can be used to access the entire community.  This may be difficult to do safely in some areas where we have built our roadway infrastructure to be so auto dominated that biking and scooter options are almost nonexistent.  In those situations, cities need to devote a portion of their capital improvements budget to building bike lanes, or at least shared bike/pedestrian pathways.

The ideal solution.  In a perfect world, there would be separate sidewalks for pedestrians, traffic lanes for automobiles and trucks, and bicycle lanes for all types of bikes and e-scooters.  Traditional bikes, e-bikes and e-scooters are all relatively close in size and speed – close enough that they should be able to coexist in well designed bike lanes.  Pedestrians are clearly slower, and motor vehicles are clearly much larger and often significantly faster.  Unfortunately, we don’t live in a perfect world so streets with all three types of facilities are relatively rare.  Where bike lanes do exist, bikes and scooters should be required to use them except when turning movements require that they use a lane of traffic – and when the bike lanes are reasonably maintained.  A bike lane that is littered with branches, broken glass and trash is not really a functional bike lane.  Cities need to not just build bike lanes, but maintain them as well.

No sidewalks.  My opinion is that e-bikes and e-scooters do not belong on sidewalks, period.  This is not a universally shared position, but it goes back to my opinion that the pedestrian realm should be sacrosanct.  Most residential sidewalks are too narrow to safely accommodate pedestrians along with e-bikes or e-scooters, and most commercial sidewalks are too crowded with pedestrians to make it safe there either.  I’m not crazy about bikes and scooters on shared bike/hike trails to be honest, but at least those paths are generally much wider than a typical sidewalk and pedestrians know that they should expect to be passed by riders going at a faster speed.  Still, a speed limit of 10 to 12 miles per hour and a requirement to give an audible warning before passing (either a bell or a verbal “on your left”) should be enforced.

My first experience on an e-scooter was in downtown Dallas probably 10 years ago when I signed up for a scooter sharing service while attending a conference.  The experience was exhilarating, but downtown Dallas was not a particularly friendly environment for either bikes or scooters.  I split my time between riding on the sidewalks – where I felt I was a threat to pedestrians – and riding in the street in a lane of traffic where I felt I was an impediment to traffic flow.  In retrospect, I probably should have stayed in the street but I’m sure I would have eventually gotten some crap from drivers unhappy with my 15 mile-per-hour speed.

This is the problem with moving a young teenager on an e-scooter or e-bike from the sidewalk to the street.  They will be easily intimidated by motorists not wanting to share the road which is likely to lead to them riding in the gutter and having cars zoom past just inches away.  On a side street, it is much easier to move toward the curb for a brief time to allow a car to pass, but on busier streets that can be a fatal mistake.  E-bike and e-scooter riders need to learn when taking an entire lane of traffic is the right thing to do.  The lesson here, of course, is that parents need to review with their children the safest routes to take to reach their normal destinations, and the streets that should be avoided at all costs.  In fact, it would not be unreasonable in my opinion to prohibit bikes and scooters on streets with high traffic volumes unless riders can maintain a pace of 20 to 25 miles per hour.

Stop signs and stop lights.  As a life-long bike rider (both analog and electric), I have to admit that I have cruised through countless stop signs without fully stopping.  I do, however, slow down and look carefully both ways before proceeding.  And if there is cross-traffic, I do stop completely until it has cleared.  What I am describing is illegal in the Kansas City area, but legal in roughly 20 states that have adopted “Idaho stop” or “stop-as-yield” laws for bicycles.  The other 30 states need to get on board with this trend.

This recommendation really has nothing to do with e-bikes or e-scooters in particular.  In fact, traditional bike riders would probably benefit the most.  This behavior, however, is often cited as proof that e-bike riders are just lawless idiots.  The reality is that most cities go crazy installing stop signs more or less randomly throughout neighborhoods as a way to slow down vehicular traffic on side streets.  This approach is needed because the streets have been so badly designed that drivers routinely go faster than they should.  Stop signs are so common in many cities that even cars don’t come to a full stop.  Bike riders pay the price for this poor design, particularly when they choose side streets as a safer alternative to riding on major streets clogged with cars.  If cities want to shift e-bike and e-scooter traffic to routes with fewer cars, then allowing them to treat a stop sign as a yield sign is a must.

Traffic signals, on the other hand, are an entirely different matter.  While stop signs are cheap enough that they can be scattered randomly, traffic signals are expensive pieces of equipment that are only installed when a series of guidelines specified by the Manual on Uniform Traffic Control Devices are met.  This means that if you are riding up to a red light on your e-bike, there is probably a good reason why you should stop.  Yes, there are situations in which the stop light is red but there is no cross-traffic in sight.  But in contrast to stop signs, that is generally the exception not the rule.  My opinion is that all bikes and scooters need to obey traffic signals at all times, and riders who don’t should be ticketed by the police.

A few states have carved out an exception for intersections where the traffic signal sensor is not sufficiently sensitive enough to realize that a bike or scooter rider is waiting for the light to turn green.  In those states, the bike rider is allowed to proceed after coming to a full stop if the cross-traffic has cleared.  I think signal technology has improved to the point where that shouldn’t be a major issue in most cities, but I understand the logic.

Another e-bike/e-scooter behavior that I find problematic is when a rider in traffic takes a full lane when moving, but at a stop light will move to the gutter to loop around cars so they can be first in the queue when the light turns green.  If you are going to take up a lane when riding in traffic (which is generally justified), then abide by that decision when you are stopped at a signal.  If bike riders want to be treated as a legitimate vehicle deserving of space on a public street, then they shouldn’t undermine that position by weaving through cars that are stopped or moving slowly.  Doing so makes them an unpredictable traffic hazard that irks drivers to the point that they push for over-the-top e-bike regulations.

The Bottom Line

There certainly have been problems with e-scooters and e-bikes in many cities across the country but they should be seen as growing pains in a new mode of transportation, not as a fatal flaw.  Regulatory adjustments may well be needed, but they should focus on the behavior of the rider more than the device itself.  Above all, cities should not ban micromobility devices because they have proven their value to a segment of the population that doesn’t have many other options.

Although there is a role for state and local regulations, what is really needed is more education for bike and scooter riders.  The problem is that there is no obvious organization to take on that responsibility.  Schools are the most likely option, but transportation safety is not at the top of their priority list.  There are good resource materials available, but getting kids (and adults) to take the time to understand them is another matter.  I think the State of Oregon, for example, has done a reasonably good job in this regard. [5] 

Notes:

1. “The Medical Minute:  E-bike and e-scooter injuries on the rise in children”; October 2025; Penn State University; https://www.psu.edu/news/hershey/story/medical-minute-e-bike-and-e-scooter-injuries-are-rise-children

2. Katherine Keeler; “Tested:  Best Electric Scooters for 2026”; November 2025; Car and Driver; https://www.caranddriver.com/car-accessories/g62530668/best-electric-scooters-tested/?utm_source=google&utm_medium=cpc&utm_campaign=mgu_ga_cd_md_comm_pmx_hybd_mix_us_18715054781&gad_source=1&gad_campaignid=18707942106&gbraid=0AAAAACfH9WjJxntGezPLolk_36PfUVewh&gclid=CjwKCAiAmp3LBhAkEiwAJM2JUIntMj8FZOo2m__ip3odpBaYoxncEsIok3GChFwW5XcDdEm63oXgxxoChwoQAvD_BwE

3. Yasemin Bayrak, et al.; “The micromobility city:  Measuring the impact of greater bicycle use”; January 2024; McKinsey & Company; https://www.mckinsey.com/features/mckinsey-center-for-future-mobility/our-insights/the-micromobility-city-measuring-the-impact-of-greater-bicycle-use

4. Dr. Ash Lovell, “New Jersey Passes Most Restrictive E-Bike Law in the U.S.”; January 2026; People For Bikes; https://www.peopleforbikes.org/news/new-jersey-most-restrictive-ebike-law

5. “Oregon Bicycling Manual”; 5th Edition; Oregon Department of Transportation; https://www.oregon.gov/odot/programs/tdd%20documents/oregon-bicyclist-manual.pdf

Post 63: The Problem With Electricity

 Electricity has been so widely available and so reliable for so long that we take it for granted.  That is the problem.  The reason it is problematic is because the way we produce, distribute and consume electricity is changing.  And as I have pointed out in numerous previous posts, change is often difficult and expensive – two things no one likes.

Electrical service is so useful and so relatively inexpensive that virtually every household not only has it, but uses it without thinking twice.  It is so reliable (more than 99.9% up-time in the U.S.) that it is a major news event when widespread outages occur.  And despite the potential for death every time we use it, we are absolutely shocked (figuratively) whenever anyone is seriously shocked (literally).

But what if all of that changed?  What if you had to cross your fingers and hope for the best whenever you came home and flipped on a light switch?  Or what if you had to ration your use of the washing machine, oven or air conditioner because you couldn’t let your electric bill get out of hand?  I’m being intentionally over-dramatic – very few households in the U.S. are likely to be impacted in that way.  The future does contain changes, however, that will be unpopular and uncomfortable enough that people will rethink how they use electricity in their life and complain to their elected representatives that “something needs to be done.”  My goal with this article is to figure out what that “something” is likely to be and how it will impact both households and cities.

How Electrical Systems Work

The more you learn about how electricity goes from generation to distribution to eventual consumption the more amazing the entire process seems.  It is like someone juggling a thousand balls at the same time.  The fact that the system works at all is due to some seriously clever human inventions, some well crafted industry standards, and to some government regulations that keep various stakeholder interests in balance.

To begin with, electrical system operators have to constantly keep power supply in sync with power demand.  Electrical equipment and appliances are built to operate within a specific voltage and frequency range.  In North America, the reference power frequency is 60 cycles per second (or 60 Hertz).  Voltage and amperage can vary depending upon the needs of each particular user, but frequency is constant and bad things happen if the frequency varies by more than one percent or so.  In fact, frequency is a primary indicator of the balance between supply and demand.  If the frequency drops it means there is more demand than supply and more power needs to be generated.  If the frequency increases, then the opposite is true.

The demand for electricity, of course, varies constantly throughout the day.  The basic pattern is relatively predictable, but weather fluctuations, equipment malfunctions, and a myriad of random events and consumer decisions can alter the basic pattern minute-by-minute.  Consequently, power system operators (and their computer systems) are making constant adjustments in real time.  In addition, system operators are expected to balance supply and demand in the most cost efficient manner possible, which means buying as much power as possible from low-cost providers and using higher-cost providers only when absolutely necessary.

To understand how all this plays out, a little background information will be helpful.  Some power plants, for example, are best at providing a relatively fixed amount of power more or less continuously.  Nuclear, coal and hydro-power plants fall into this category, and are generally referred to as baseload generators because they are used to supply the base threshold of power that is required 24/7.  The downside of these generators is that they take a long time to start up and they aren’t very good at responding to sudden spikes in demand.

Intermediate, or load-following generators, are used to supply power to match the ups and downs that are relatively predictable on a day-to-day basis.  These plants are generally powered by natural gas turbines that can ramp up and down relatively economically.  The final category of power producers are known as peaking plants, which are used for the relatively short-duration peaks of the daily demand cycle and for unexpected surges in demand.  These plants typically use quick-response gas turbines that can respond in minutes to changing demand, or – increasingly in recent years – large scale battery storage facilities which can supply additional electricity in seconds.  Peaking plants are an essential element of the system but the power they supply is expensive.

Utility-scale solar arrays and large wind farms don’t fit neatly into any of the traditional categories.  They are generally used as baseload generators because the cost of the power they produce is generally lower than both nuclear and coal plants, but their fluctuating output makes integrating them with other power sources a bit challenging.  Pairing wind and solar with battery storage can smooth out the fluctuations considerably which makes life easier for system operators, particularly as renewables like wind and solar provide a larger and larger share of total power supply.

To make things even more complicated, it is often cheaper for the utility company (and “greener” from an environmental standpoint) to manage demand during peak periods rather than buy expensive power from peaking plants.  This “demand management” approach uses rates that fluctuate during the day (time-of-use rates) to make using electricity during peak periods expensive, thus incentivizing consumers to shift their consumption to off-peak times.  Unfortunately, most people don’t like doing their cooking and laundry in the middle of the night so time-of-use rates can increase bills for some residential households.

Defining the Problem

Exploding demand.  From 2005 to 2020, demand for electricity was almost flat (average increase of 0.1% per year).  Improvements in energy efficiency were largely offsetting economic and demographic growth. [1]  That has changed in recent years, however, as electrical demand set a new record in 2024 and again in 2025, and is now growing rapidly enough in many areas that electrical utilities are struggling to keep up.

Nearly four years ago I posted an article to this blog that talked about the “electrification of everything.”  That trend is still continuing as battery powered electric vehicles replace vehicles with internal combustion engines, heat pumps replace natural gas furnaces and water heaters, induction stoves replace gas stoves, and on and on.  The things I talked about in that post primarily affected residential demand, and while they still are trending upward they represent a relatively small portion of recent demand increases.  While modest in terms of total demand, the trend is still significant because it means that demand is increasing everywhere, which means that the distribution grid will eventually need to be upgraded everywhere rather than in just a few places.

More relevant in recent years has been the proliferation of data centers, each containing thousands and thousands of computer servers.  Data center construction is booming in order to meet the insatiable computing needs of artificial intelligence and cloud data storage.  It is estimated that in 2024 U.S. data centers consumed approximately 4 percent of total electrical demand, an amount roughly equal to the demand for the entire country of Pakistan.  Data center demand is expected to grow by 133% over the next five years [2] but some analysts consider those forecasts to be too low.  The mania over artificial intelligence is leading to announcements for data center investments that are enormous in scale.  If it all comes true, and that is a big if, the combined impact might bring the power grid to its knees. 

Take for example, the $11 billion data campus that Amazon is building in northern Indiana known as Project Rainier.  Currently seven data center buildings are operational, but a total of 30 buildings are planned.  The full site will eventually draw roughly 2.2 gigawatts of electricity, equivalent to the power consumed by 1.6 million homes. [3]  Every major player in the AI industry has similar projects either under construction or on the drawing board.

While there are data centers in every state, a third of the roughly 4,000 data centers in the U.S. are clustered in three states:  Virginia (643), Texas (395) and California (319).  In addition, there are significant clusters in Chicago, Phoenix, Atlanta, Columbus and Des Moines.  Typically, an AI-focused “hyperscaler” data center contains at least 5,000 servers and consumes electricity equivalent to the demand from 100,000 homes.  Newer designs currently under construction are expected to increase that demand by at least a factor of ten.  Although there are advantages to clustering data centers together (e.g. network access), power demands are stretching the capabilities of local utilities to the point where proposed data centers are having difficulties getting power supply commitments and consequently are postponing construction or are looking at locations where power is more available.

Supply constraints.  If demand is growing, won’t the market respond by building more power plants in order to increase supply?  The answer is yes, but there is a significant timeline mismatch.  Utility scale power plants, wind farms or solar panel arrays can’t simply be added to the grid willy-nilly without upsetting the delicate balance that keeps the grid functioning smoothly.  Transmission lines, substations, transformers, switching gear, and grid control systems all need to be upgraded as the new power source comes online.  All of that takes five years or more to get planned, permitted and built.  The process is so time consuming that there is currently a queue of power generation projects waiting to get approval to connect to the grid.  That sounds like a good problem to have, but many proposed projects never get built because of problems that are uncovered during the approval process.  The current system is a roadblock to new power capacity, but it is a necessary evil.

The reality is that AI data center demand has ramped up quickly in just the past few years, but growing the power capacity of the grid is a much slower process.  A new data center can be planned and built in a couple of years, but the matching power supply might take twice as long – or in some cases three or four times as long. [4]  This is particularly true for some of the more exotic solutions that have been proposed such as geothermal or modular nuclear power plants.

Things have gotten desperate enough that old nuclear power plants are being brought out of mothballs.  Microsoft recently signed a 20-year power purchase agreement with Constellation Energy to restart a reactor at Three Mile Island to power planned AI data centers.  Three Mile Island, of course, was the site of America’s worst nuclear accident back in 1979.  A second, undamaged reactor was eventually restarted and ran until 2019 when it was shut down because it was too costly. [5]  The needs of AI have apparently changed the economic equation because costly power is better than no power at all.

Shaky infrastructure.  The period of flat demand growth from 2005 to 2020 lulled utility companies into thinking that infrastructure upgrades were a relatively low priority.  That has changed recently for three reasons.  First, the combination of aging infrastructure, high winds (or other extreme weather) and drought conditions have caused enormous liability issues.  Pacific Gas & Electric in California filed for bankruptcy in 2019 and pled guilty to 84 counts of involuntary manslaughter following the 2018 Camp fire.  Hawaiian Electric has been hit by a dozen lawsuits over its alleged role in the wildfire that killed more than 100 people and burned the town of Lahaina to the ground.  The Fitch rating agency warned that the company faces more than $3 Billion in potential liability claims.  PacifiCorp and Xcel Energy are facing similar problems for the 2020 Labor Day fires in Oregon and the 2021 Marshall fire in Colorado. [6]

The average age of the country’s transmission lines is 40 years old, and roughly a quarter of the lines are more than 50 years old which is the typical intended lifespan.  More than half of US transformers will reach their intended lifespans in the next five to ten years.  Utilities are spending billions of dollars annually to remedy the problem, but supply line disruptions and tariffs make the work more expensive, and the scale of the problem makes the solution a decades long affair.  Utility companies are finally taking extreme weather seriously but there is a lot of catching up to do.

Second, the electrical grid is having to supply power to the above-mentioned data centers which are 24/7 power hogs.  Take, for example, the 2,250-acre data center campus currently being built by Meta in Louisiana.  The project, named Hyperion, is being built in Richland Parish which is pretty much in the middle of nowhere – more than 100 miles from either Shreveport or Jackson, the only towns of any size in the area.  Upon completion, it is estimated that the campus will consume three times as much electricity as the City of New Orleans.  Consequently, the local utility company (Entergy) is spending $1.2 Billion to build a 100-mile, 500kV transmission line, along with eight substations, and eight 230kV transmission lines.  In theory, Meta is covering the cost, but projects like this distract utility companies from addressing the underlying fragility of their electrical networks.

Finally, utility companies are being pushed to harden the electrical grid against possible cyber attacks.  The grid has long been considered a soft target for terrorists or enemy nations because of outdated (and easily hacked) control systems and the distributed nature of the grid itself.  Steps are being taken, but again, this is likely a decades-long effort.

Rising prices.  So let’s quickly recap.  Electrical demand is rising, supply is constrained by long approval times, and the distribution network is aging and fragile.  Should we be surprised that prices are rising?  Unless you completely slept through your economics class, the answer, of course, is no.  According to the St. Louis Federal Reserve, during the six years from 2014 through early 2020, the average US City electricity price per kilowatt hour was basically flat (actually declining on an inflation adjusted basis).  During the five years prior to that the average price rose a total of just over six percent.  But in the five and a half years since early 2020 (through August of 2025) the average price has gone up over 40 percent.  

To be fair, this increase is just a third more than the increase in the Consumer Price Index, so it is bad but not disastrous.  Coming on the heels of a ten year period of hardly any increase, however, it seems much worse.  Now in addition to the rapidly rising costs of household essentials like food, medical care, and housing, working class families have to worry about the electrical bill being beyond their budget. 

Interestingly, in the states with the highest average increases, the cost of power generation has declined slightly.  It is the cost of electrical transmission (long distance) and distribution (short distance) that has been rising faster than inflation. [7] The decline in power generation costs coincides with a shift away from relatively expensive coal power plants to less expensive natural gas and renewable sources.  Coal produces just a third of the US electric power that it did twenty years ago and our pocketbooks and lungs are better off as a result.

However, skyrocketing demand from data centers may change all of that.  Power generation costs have ticked back up over the past two years and are likely to continue rising.  As noted earlier, power providers are so desperate for new capacity that old nuclear reactors are being brought back to life and coal plants slated for retirement are being kept operational.  These are not low cost sources for electricity, so overall rates will increase.  Fortunately, the vast majority of new power generating capacity will come from solar and wind – often supplemented by large scale battery storage – since renewables produce relatively cheap power and can be brought online faster than other sources.

The final point to understand is that electricity demand and price increases are not evenly distributed across the country, nor is there even a clear pattern.  The ten states with the lowest average residential rates (starting with the lowest) are Nevada (11.95 ¢/kwh), Louisiana, Idaho, Tennessee, Kentucky, North Dakota, Arkansas, Washington, Nebraska and Mississippi (13.97 ¢/kwh).  The ten states where residential rates have gone up the most (Sept 2024 - Sept 2025, starting with the worst) are New Jersey (21.1%), Illinois, Indiana, Pennsylvania, Maryland, Florida, Georgia, Ohio, New Hampshire, and Washington (11.3%). [8]

Helpful Trends

The gloom-and-doom statistics above may lead you to think that we are going to suffer major grid disruptions and pay more each month for the privilege.  While that is a possibility, it isn’t very likely for a variety of reasons.  To begin with, the electrical grid is run by people who are smart (and cautious), and the system has a lot of built-in redundancy (even if much of it is getting outdated).  Yes, we are likely to pay more and there may be an increase in localized outages or brown-outs, but there are several countervailing factors that I think will save us from anything catastrophic.

Bursting the AI bubble.  The list of data center construction projects that have been announced by various tech companies is very long and their potential power demand is enormous.  Oddly, however, that potential impact isn’t showing up in the energy futures market.  For some reason, the “smart money” isn’t buying the story that electrical demand is going to outstrip supply because of the data centers powering artificial intelligence.

Every tech company, it seems, is jumping on the AI bandwagon and to be taken seriously you apparently have to announce expensive initiatives like billion dollar data centers.  It is possible that many of these announcements are from AI unicorns that will be bankrupt before any ground is broken, or are gross exaggerations designed to garner press coverage.  It is too soon to know for sure, but demand increases might be modest enough to be handled without threatening grid stability.

Soaring solar.  Nearly all forms of electrical power production have gotten less costly over time due to technological improvements and manufacturing efficiencies.  But there is one form of electrical production that has outshone the others, and that is photo-voltaic solar.  Using data from industry analyst Lazard for the Levelized Cost of Energy – total construction, maintenance and fuel costs divided by total energy production over the life of the facility – shows that the cost per megawatt-hour for utility scale solar has fallen by a remarkable 88 percent over the past 15 years. [9]  The energy produced by each solar cell has nearly doubled during that time and production costs have plummeted as manufacturing volume has increased.

Solar power has been the great “democratizer” of energy – simple and cost-effective enough that individual households and companies can generate their own power and store it for use at any time when paired with batteries.  This “behind-the-meter” electricity saves the individual user a significant amount of money but it disrupts the economic model behind the electric utility industry.  Utility companies generally spread operational costs across their customers based on total consumption, so if private solar causes demand to drop it can result in rates going up for everyone else.

Not every location is ideal for solar facilities, but in the best locations solar now has the second lowest cost behind on-shore wind farms.  Ongoing innovations are likely to keep the cost per watt falling faster for solar than for other competing options.  Even less than ideal locations are generally cost competitive now and may have outright cost advantages within the next five years.

Many solar projects are now paired with large battery storage installations to make it easier for grid operators to dispatch electricity around the clock as needed.  As with solar cells, battery efficiency and the cost of manufacturing have improved dramatically over the past ten years.  New battery configurations and chemical compositions are being announced almost weekly which will improve performance, reduce costs and lower environmental impacts.  Battery storage facilities may eventually account for 20 to 30 percent of electricity supply during periods of high demand.

Decentralizing the grid.  One of the advantages of solar power production and battery storage is that moderately sized facilities can be distributed across the grid as opposed to traditional power plants which are centralized in just a few locations.  This characteristic is not only reducing transmission costs, but it is allowing the overall electrical grid to be subdivided into microgrids which can be isolated from the main grid during times of instability or weather-related disaster.  Microgrids with their own battery storage and/or solar arrays (or other generating source) are not likely to be self-sufficient for more than a day or two, but that might be enough to significantly lessen the spread of major outages.

Microgrids are currently being created primarily for commercial and industrial facilities where uninterrupted 24/7 operations are critical (e.g. medical campuses, airports, logistics hubs, military bases), but they are likely to spread gradually to more mundane parts of the city.  Distributed power generation and storage will eventually simplify transmission and distribution needs, and reduce demand for expensive peaking plants.

The Bottom Line

To summarize, the electrical grid is likely to be stressed over the next few years in several different ways:

• Total electrical demand is likely to continue rising for the foreseeable future, for both residential and commercial customers;

• Utility companies are likely to continue investing heavily in infrastructure upgrades for capacity reasons and to replace aging equipment;

• Extreme weather events and changing climate patterns will continue to test grid resiliency; and 

• Power generation decisions are likely to be influenced by not only spiking demand near data centers, but also by shifts in political policies at the federal level.

All of this, in my opinion, is likely to cause rates to continue to rise over much of the country.  Here are a couple of ways this is playing out.  First, the Colorado River basin – which is lined with hydroelectric dams – is in the midst of an extended drought.  The “full pool” elevation for Lake Mead, for example, is approximately 1,220 feet but it is currently at around 1,060 feet.  The turbines at Hoover Dam are continuing to produce power, but at a reduced rate which means that many of the utility companies that depend on that electricity are having to purchase power from the open market which is generally more expensive. [10]  If Lake Mead water levels drop to roughly 1,000 feet then electricity can no longer be generated at all, and while that is unlikely in the near term it is a possibility if the drought continues.

This may seem like an isolated issue, but extreme weather events – or even the threat of extreme weather – affects the electrical grid on a regular basis.  In Asheville, North Carolina, for example, it took 10 days to restore power to the majority of customers following the torrential rains from Helene in September of 2024.  Restoring power to more isolated customers in the surrounding area took weeks and even months.  Xcel Energy in Colorado cut power to roughly 100,000 customers just recently due to the threat of wildfires stemming from drought and high winds.  The components of the electrical grid are uniquely exposed to extreme weather which multiplies the risk associated with aging infrastructure.

Second, spiking demand and political pressures at the federal level may push some energy producers into making decisions that are questionable from a long-term economic perspective.  I doubt anyone is stupid enough to build a new coal powered generating plant despite the administration’s “mine, baby mine” attitude, but there is likely to be a shift toward more natural gas power plants despite the relatively high cost of the electricity they produce.  Even though natural gas prices have historically been volatile and are currently at relatively high levels, the Trump administration considers natural gas plants as “dependable” and a good match for the 24/7 demand from data centers.  In my opinion, however, power from the combination of solar, wind and battery storage is the most economical long-term strategy.  Unfortunately, utility company profits are based largely on a pre-set rate of return applied to all system assets, so building inefficient (and polluting) power plants is fine as long as they can be justified in some other way (e.g. “dependable”).

Finally, there is the not insignificant risk that technological change will either reduce the demand for AI data centers or will reduce the power demands of AI data centers.  After all, the history of computer performance over the past several decades has shown exponential improvements in calculations per watt of energy consumed.  In fact, the next-big-thing in computing is known as a quantum computer, and while it might be a decade or more until quantum computers are commonplace, when they arrive they will undoubtedly be used for things like artificial intelligence and their performance will be orders of magnitude more efficient than today’s best CPUs.  This raises the possibility that the data centers which need huge amounts of electricity in the near-term will suddenly need substantially less at some point in the future – leaving us over supplied with electrical capacity.  Unlike most businesses, however, utility companies can never lose money because they overestimated demand.  They are guaranteed a profit which means that rates will go up because total costs will need to be spread across a smaller base of power consumption.

In short, I don’t see electric bills doing anything but going up in the foreseeable future.  The long term trend of declining power production costs seems likely to continue – although it may be temporarily interrupted by the short term scramble for power at any cost – but it will be overwhelmed by increases in transmission, distribution and grid resiliency costs.  We are so dependent upon electricity that we have no option other than paying the bill, but it is one more straw on the camel’s back that is the household budget.  I worry about how much more working class families can take before our economic system starts to break.  Changes to the electrical grid are just another example of the economic squeeze that families are facing.  As a society, we continue to paint ourselves into a corner, one incremental decision at a time, and I don’t see an easy way out.

Notes:

1. “After more than a decade of little change, U.S. electrical consumption is rising again”; U.S. Energy Information Administration; May 2025; https://www.eia.gov/todayinenergy/detail.php?id=65264

2. Rebecca Leppert; “What we know about energy use at U.S. data centers amid the AI boom”; Pew Research Center; October 2025; https://www.pewresearch.org/short-reads/2025/10/24/what-we-know-about-energy-use-at-us-data-centers-amid-the-ai-boom/

3. MacKenzie Sigalos; “Amazon opens $11 billion AI data center in rural Indiana as rivals race to break ground”; CNBC; October 2025; https://www.cnbc.com/2025/10/29/amazon-opens-11-billion-ai-data-center-project-rainier-in-indiana.html

4. Martin Stansbury, et al; “Can US infrastructure keep up with the AI economy?”; Deloitte Touche; June 2025; https://www.deloitte.com/us/en/insights/industry/power-and-utilities/data-center-infrastructure-artificial-intelligence.html

5. Kris Maher and Jeanne Whalen; “Three Mile Island’s Nuclear Revival Pits Those Who Fled Against Job Seekers”; The Wall Street Journal; December 2025; https://www.wsj.com/business/energy-oil/three-mile-islands-nuclear-revival-pits-those-who-fled-against-job-seekers-2758e115?gaa_at=eafs&gaa_n=AWEtsqc5EYPgpOJS0JxWkorwIudTw0ivXgcmCYu6RyHmprKhC1UB6JVgFpP5s9qGFiw%3D&gaa_ts=692f6098&gaa_sig=ue2UXdB7U9wD2_Tz9UCgKqLwWaypCRIyF-igVa5GHxvFUjWsHHxfgxThCf_sN5wxktvjaIaWVn0BaSMgRmKQpA%3D%3D

6. Spencer Kimball and Gabriel Cortes; “Electric utilities face billions in wildfire liability with aging power lines risking another catastrophe”; CNBC; August 2023; https://www.cnbc.com/2023/08/28/wildfire-risk-electric-utilities-face-billions-in-liability-with-aging-lines.html

7. Jesse Buchsbaum and Jenya Kahn-Lang; “What’s Happening to Electricity Affordability? In Five Charts”; Resources; October 2025; https://www.resources.org/archives/whats-happening-to-electricity-affordability-in-five-charts/

8. Caitlin Ritchie; “Electricity Rates by State”; Choose Energy; Dec 2025; https://www.chooseenergy.com/electricity-rates-by-state/

9. Max Roser; “Why did renewables become so cheap so fast?”; Our World In Data; April 2025; https://ourworldindata.org/cheap-renewables-growth

10. Daniel Rothberg; “Many miles from Lake Mead, rural electric utilities struggle with Colorado River shortage”; The Nevada Independent; October 2022; https://thenevadaindependent.com/article/many-miles-from-lake-mead-rural-electric-utilities-struggle-with-colorado-river-shortage