* PJM capacity prices up more than 1,000% in the last two

years

* Industrial electricity prices grow faster than

residential, business costs

* New regulations to manage data center power use could hit

factories

* Industrial manufacturers look for ways to cut costs

By Laila Kearney

NEW YORK, July 7 (Reuters) - For years, electricity costs

for the Belden Brick Company in Sugarcreek, Ohio, had been

relatively stable. Last year, they surged by 90% - largely

because of rising power demand from data centers in the region.

The 141-year-old brick manufacturer, whose products can be

found in iconic buildings including the Texas Alamo and Notre

Dame University, is seeing power bills rise mainly from a

monthly capacity charge, which recently jumped from $1,600 a

month to $12,000.

Belden Brick is among many manufacturers across America's

heartland where costs are rising as power-hungry data centers

serving the artificial intelligence industry proliferate.

Factory electricity bills, a core expense, are rising faster

than for many homes and other businesses, according to a Reuters

review of U.S. energy data and interviews with nearly a dozen

manufacturers and industry advocates.

Federal, state and local governments responding to consumer

anger and grid-stability concerns are pushing Big Tech to pay

more for their expected demand. But some of their proposals lump

in smaller factories with tech giants such as Meta and

Amazon ( AMZN ), whose power needs can dwarf even large

manufacturers by a factor of 50.

Meta declined to comment. Amazon ( AMZN ) did not respond to a

comment request.

Capacity charges are designed to compensate power generators for

ensuring the grid has enough electricity for peak usage and to

spur development of new supply. They generally account for about

10% of residential bills but can represent up to three times

that for manufacturers, according to interviews with

manufacturers, attorneys and energy experts.

Such fees have soared in the 13-state region covered by grid

operator PJM Interconnection due to stagnant supply and demand

from data centers, where one server warehouse can use as much

electricity as a mid-sized town.

"That capacity charge just jumped off the page," said

company president Brad Belden, part of the fifth generation

working at the company.

Despite such capacity-charge hikes, PJM was forced to take

emergency steps last week, including asking some users to curb

electricity use, to prevent rolling blackouts as searing

temperatures pushed peak demand to a new record.

The rising costs and regulatory uncertainty threaten some

factories' viability at a time when U.S. President Donald Trump

is prioritizing domestic manufacturing, advocates and policy

experts say. These businesses are considering raising prices,

slowing growth, or in some cases relocating.

Belden has raised brick prices by 4% and profits have still

shrunk. If bills keep rising, he said local manufacturers may

quickly reach limits on cost-cutting or price-hiking.

"There are going to be some companies that are on the

razor's edge," said Belden.

The White House said in a statement that Trump has taken

action to cushion the blow on manufacturers, citing his hosting

of tech companies signing a "ratepayer protection pledge"

earlier this year and directives to build more power plants in

PJM, paid for by tech companies.

Data center advocates say the industry's rapid expansion is

driving long-overdue investments in America's electric grid and

cite other factors driving up costs, including power-plant

retirements and transmission constraints.

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, a trade group.

A 1,000% PRICE INCREASE

PJM, the largest U.S. grid operator, covers a Mid-Atlantic and

Midwest manufacturing belt from New Jersey to northern Illinois

and as far south as Tennessee that has become attractive to data

center developers.

Of the eight U.S. states considered emerging data center hubs,

five are in the Rust Belt, according to Synergy Research Group

data.

The clash of old manufacturers and new data centers in the

same region weighs heavily on costs and grid reliability. Data

centers, said PJM spokesperson Jeff Shields, "can be built

faster than the generation needed to serve them, driving up

demand faster than supply."

PJM sets capacity prices paid to power generators based on

forecasted supply and demand, and manufacturers often pay an

outsized share once capacity charges filter down to customers.

PJM's capacity prices jumped from $28.92 per megawatt-day in

2024 to the current $329.17 per megawatt-day - a 1,038% rise -

driven primarily by data center growth.

That helped push up electricity prices more quickly for

industrial users in big manufacturing states that are also

becoming data center hubs in PJM's region, according to Reuters

calculations using U.S. Energy Department data on electricity

prices.

Average industrial electricity prices were up 31% in

Pennsylvania and 26% in Ohio as of December 2025 from 12 months

earlier, compared with a 7% rise nationwide for industrial

users. Residential customers in those two states saw increases

of 14% and 9%, respectively.

Even a 1% or 2% power-cost increase can stretch factory

owners, who often operate on thin margins and use lots of

electricity, economists and industry officials say.

"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.

GRAVEYARD SHIFT

Capacity charges at plastic products manufacturer Plaskolite

jumped to $1.2 million annually from $200,000 a year earlier at

its combined Pennsylvania and Ohio facilities. The company is

considering shifting from using the grid to powering its

operations with a direct natural gas feed, 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 produces materials

used in electronics, is considering revving up production during

the difficult-to-staff graveyard shift, when electricity is

cheaper.

"We're trying to be as creative as possible just to maintain

competitiveness," said John Holeman, Tosoh's ( TOSCF ) director of

facilities and maintenance.

PROTECTING CONSUMERS, HITTING MANUFACTURERS

Manufacturers are classified in the same electricity-rate

class with data centers, and they are being caught up in state

and federal proposals aimed at shielding homes and small

businesses from the price spikes tied to data centers.

Currently, very large energy users with their own onsite power

generation in PJM pay transmission charges only for the power

they draw from the grid. The Federal Energy Regulatory

Commission is proposing that companies pay transmission charges

for onsite power generation also to ensure the grid has enough

supply if on-site power fails.

Manufacturing advocates are appealing to FERC for

exemptions. FERC declined comment.

At least 10 U.S. states also have pending rules aimed at

managing electricity demand from data centers, but their

parameters could also hit manufacturers, according to data from

the nonprofit Smart Electric Power Alliance and North Carolina

State University's NC Clean Energy Technology Center.

"Manufacturers are not data centers," said Cicio. "We should not

be impacted by their effort to manage data centers."

Belden and other manufacturers want Ohio's regulators to

scrutinize how utilities are estimating data center electricity

demand. Meanwhile, they're trying to cut their own costs.

"You start to look at alternatives," said Belden, who is

thinking of installing onsite power generation to reduce

reliance on the grid. "Manufacturing goes as power goes."