This article is published alongside a companion article in Jacobin tracing how deregulation, not data center growth itself, has driven up American electricity prices — a framework applied here to Alberta’s own data centre boom.
In mid-2026 Meta announced a one-gigawatt data centre near Edmonton, the single largest addition of electricity load ever proposed in Alberta, and the provincial government is competing for more data centre projects. It is, however, a risky bet for Alberta’s deregulated electricity market. New research from the United States finds that data centres increase electricity prices most among privately-owned utilities in deregulated regions — the closest analogue to Alberta’s system. Albertans already face Canada’s highest electricity costs, peaking in 2022 and 2023, and contributing to the roughly $24 billion Albertans paid above the Canadian average between 2001 and 2024. It also recorded more EEA3 grid alerts — the most severe warning of possible blackout — than any other North American grid.
Adding heavy loads to a grid is not a new phenomenon: North American electricity demand across the 20th century grew faster, for longer, than anything the current data centre buildout proposes. What is new is the kind of market in which that load is arriving. The analysis below demonstrates how the traditional relationship between electricity prices and demand growth broke down in the age of deregulation, or “restructuring” as the industry calls it.
Decades of Growth With Falling Prices
Figure 1 illustrates the real, inflation-adjusted electricity consumer price index for the United States and Canada over more than a century. In both countries, prices fell for more than half a century, starting during the Great Depression, while experiencing the most concentrated period of expanded electrification had experienced. By the eve of the 1970s energy crisis, prices had fallen two-thirds below their 1920 levels. That decades-long decline ended amid global energy shocks and the broader economic turmoil that accompanied them.
Figure 2 also shows how much electricity demand grew over that same period. Starting from 1922, U.S. consumption first doubled by 1936 – a 14-year span that included the Great Depression. It then doubled again in just seven years by 1943. Successive doublings of electricity generation followed each decade at similar rates in both Canada and the U.S. The pace then slowed sharply by the 1970s energy crisis, with the next doubling of electricity generation taking until 1996. Electricity load has stayed essentially flat from the early 2000s until some growth resumed in the U.S. starting in 2022. Five doublings in fifty years is a far larger shock than anything the AI buildout is projected to deliver.
Figure 3 plots the load growth/price relationship directly, comparing the annual percentage change in U.S. demand and in real prices over the past century. The U.S. provides a much more illustrative example of what could be expected in Alberta because that is where data centre growth has been concentrated to date and where expansive deregulation has taken hold; about one-third of U.S. retail electricity sales are in deregulated markets while the rest are served by traditionally regulated or public utilities. In Canada, Alberta is the only deregulated province (with Ontario a hybrid system), and it accounts for roughly 10% of national electricity sales.
From 1922 to 1973, demand grew in the U.S. by an average of 7.7% per year while real prices fell by an average of 1.7% annually. From 1974 to 2025, growth in the U.S. slowed to an average of 1.7% a year and the real price decline nearly vanished, averaging just 0.2%. For most of the last century in the United States, the growth of electricity generation and the price of electricity reflect each other in a mirror image. Steady, predictable, substantial electricity generation growth went together with falling real electricity prices. When the growth disappeared, prices stagnated or increased.
What Deregulation Broke
The mirror image illustrated in Figure 3 was a product of an institutional structure based on a political economy compromise. Vertically integrated utilities — combining generation, transmission, and distribution within a monopoly franchise area—captured the economies of scale that came with growth. Economic regulation required that some of the efficiency gains be shared with consumers in the form of lower prices. A large new industrial load was therefore an opportunity: it increased generation utilization and spread fixed costs across more sales, pushing the regulated average price down.
When the grid was doubling every decade — “building for growth” as the industry used to say — the queue for adding additional large loads was short as capacity kept pace. Restructuring, which began in the U.S. electricity sector in the late 1990s, severed that link. Generation, transmission, and distribution were split into separate businesses, generation was opened to competition, and prices began clearing through auctions that price power at the margin. New load appeared to shift the demand curve upward in generation markets, raising wholesale energy prices, those increases were then mostly passed on to consumers through higher retail prices.
Figure 4 zooms into the deregulation era, from 1999 to 2025, and shows how quickly the century-old relationship came apart in the U.S. By 2007 it had inverted, with prices and generation now moving together rather than in opposite directions. Since 2020, both prices and generation have risen in tandem. That is the signature of a system in which new load pushes prices up.
This is not only a pattern in the aggregate data. The June 2026 study cited above found that data-centre entry raised average retail electricity prices by a statistically significant 6.1% among privately-owned utilities in deregulated states, compared with no statistically significant increase among publicly owned utilities in regulated regions. A March 2026 study found the same mechanism at the wholesale level, with data centres raising competitive wholesale prices in deregulated supply-constrained regions, while having negligible effects in regulated markets. The same load, arriving in two different market structures, produces two different bills.
Alberta’s Persistent Deregulation
Deregulated electricity markets such as Alberta’s were formulated in an era of stagnation and not designed to accommodate load growth. Private generators tend to delay new capacity until tight supply raises prices enough to justify investment – the dynamic behind Alberta’s poor price and reliability performance in 2022-23. New investment subsequently helped lower prices in 2025 and 2026, but not enough to offset the extraordinary earlier spike, which prompted nearly $1 billion in government electricity rebates. This is the system to which the Alberta government wants to attract hyperscalers.
The government has been advised that the grid it has cannot handle its data centre ambitions. Instead of introducing regulations to ensure capacity or public investment, the province is seeking several workaround policies while maintaining its deregulated market. The first proposed administrative fix is “tethering,” wherein a large data centre gets connection priority if it can sign up new or spare grid capacity beforehand, attempting to match new demand with new supply. The second proposed fix is “self-supply” in which data centre builders also build dedicated on-site power plants that do not feed into the main grid – a form of “grid desertion.”
Self-supply is the proposed arrangement for Meta’s Edmonton-area data centre. The third fix, called “bridging,” would let a planned tethered or self-supply data centre draw from the existing electricity pool before new generation or self-generation is built for up to three years. Alberta’s system operator (AESO) has stated that “bridging load is anticipated to increase pool prices,” and EPCOR, one of the province’s few publicly-owned utilities, has also concluded that these workarounds for the sake of data centre investment would mean “higher prices for Alberta consumers.” As the historical evidence shows, sustained load growth helped lower electricity prices under the traditional utility model. Alberta had the most to gain from spreading its high costs over more sales. Instead of expanding the grid, however, it is promoting grid desertion in the smallest market grid in North America. The one province that could most have used a large new customer has spent the last 25 years making sure such new customers arrive as liabilities rather than opportunities.
