Microsoft Corp (NASDAQ:MSFT) said on Tuesday it will pay higher electricity rates for its US data centers used to power AI models, a move the company said is intended to prevent rising power demand from being passed on to consumers.
The company committed to paying electricity rates sufficient to fully cover the cost of its data centers, replenishing more water than it withdraws locally, and paying full property taxes in communities where it operates.
Microsoft said the commitments extend existing practices in some states, including Wisconsin, across its entire US data center portfolio.
Microsoft president and vice chair Brad Smith announced the pledges at an event near the White House, saying the technology industry must adjust as AI infrastructure scales.
“The industry operated in a certain manner in the first half of the decade that is not an appropriate path for the second half of the decade,” Smith said.
The move comes as the Trump administration increases pressure on technology companies to ensure households do not bear the cost of electricity-intensive AI infrastructure.
US President Donald Trump has repeatedly said he does not want Americans paying higher power bills because of data centers, arguing that companies building them should absorb the costs. He has not proposed a new tax or formal surcharge, instead urging higher negotiated rates or other arrangements that prevent utilities from passing costs on to residential customers.
In a Truth Social post earlier this week, Trump said his administration was working with Microsoft to ensure Americans do not “pick up the tab” for data-center power consumption, calling the company’s commitment a first among major technology firms.
Microsoft said it will sign advance agreements with utilities to support infrastructure investment and grid capacity, with the goal of preventing consumer rate increases while continuing to expand its AI footprint.
Wedbush analysts said the announcement underscores intensifying scrutiny of Big Tech’s energy use as data center construction accelerates.
Wedbush said Microsoft’s Community-First AI Infrastructure initiative aligns with that stance, highlighting commitments to cover electricity costs, work with utilities to add capacity, and improve efficiency, including a targeted 40% improvement in data-center water use by 2030.
The firm expects other large technology companies to adopt similar measures, but cautioned that higher operating costs could slow the pace of data center buildouts.
“While this initiative alleviates a major headache from the Trump administration, this will create a larger bottleneck with big tech organizations looking to build out large data center footprints as quickly as possible without impacting the bottom-line with this potentially slowing down the data center buildouts with the US entering a crucial time of the AI revolution with the US facing significant energy shortages/issues to fuel data center buildouts,” they wrote.
The analysts noted that US residential utility bills rose about 6% year over year as of August 2025, with larger increases in states with heavy data-center concentrations such as Illinois, Virginia and Ohio. Wedbush said the issue is likely to remain a point of tension between the administration and technology companies as the US seeks to expand AI infrastructure amid tightening energy constraints.
Shares of Microsoft traded 2% lower on the update, trading hands at about $467 on Tuesday afternoon.