Data center demand pushed wholesale electricity prices up an estimated 8.6% in the Arizona-New Mexico region during 2024 and 2025, according to a Federal Reserve Bank of Dallas working paper that projects the effect could reach 14.7% by 2028.

The findings land as southern New Mexico weighs the energy demands of Project Jupiter, the massive data center development under construction in Santa Teresa.

The study, written by economists Owen Kay, Robert Reaser and Reid Taylor and revised Oct. 9, used an hourly model of electricity generation, demand and transmission across 23 U.S. regions, as first reported by Organ Mountain News. The researchers estimated how prices would differ if data center electricity demand were removed.

For the Arizona-New Mexico region, the estimated effect averaged $2.93 per megawatt-hour, or 8.6%, during 2024 and 2025, according to Organ Mountain News. By 2028, the researchers project that figure could climb to $4.32 per megawatt-hour, or 14.7%.

Nationally, data centers raised wholesale prices by 6.9% in 2025, with a projected 12.3% increase by 2028.

Those percentages reflect modeled effects on wholesale electricity prices, not direct increases in household utility bills. The study does not establish a separate figure for New Mexico customers alone, because the Arizona-New Mexico region covers a broader electricity market. The paper is a preliminary working paper, and its findings represent the authors' analysis, not an official position of the Federal Reserve System.

Heinrich bill targets grid cost-shifting

U.S. Sen. Martin Heinrich, the top Democrat on the Senate Energy and Natural Resources Committee, released a fact sheet Nov. 5 describing provisions of bipartisan legislation that would require data centers to cover the costs of transmission upgrades they create, according to Organ Mountain News. Heinrich characterized the proposal as a way to prevent families and small businesses from subsidizing infrastructure built for large computing facilities.

The Bipartisan American Affordability and Jobs Act of 2026, introduced Sept. 30, is co-sponsored by Sens. Mike Lee, R-Utah, Shelley Moore Capito, R-W.Va., and Sheldon Whitehouse, D-R.I.

Under the bill, the Federal Energy Regulatory Commission (FERC) would establish rules requiring data centers to pay for both their share of existing transmission infrastructure and additional upgrades needed to serve them. New data centers and high-density computing facilities using at least 20 megawatts would have to cover the full incremental costs of generation, storage, transmission and distribution built to serve them.

States would gain additional authority to set rate structures for data centers and use certain revenues to reduce electricity costs for other customers. Utilities would also have to report electricity sales to data centers through the U.S. Energy Information Administration.

In coverage published Nov. 5, Source New Mexico reported that Heinrich said in an emailed statement: "But our priority right now is passing the Bipartisan American Affordability and Jobs Act, which would make it illegal for data centers to shift the costs of their grid upgrades and infrastructure onto consumers."

The bill has not become law. Implementation would require federal rulemaking, state regulatory action and utility rate proceedings, a process the Bipartisan Policy Center noted in a Nov. 3 analysis could take years before savings appear on customers' monthly bills.

What it means for southern New Mexico

The Dallas Fed paper does not estimate Project Jupiter's specific electricity costs or its potential effect on local utility rates. Project Jupiter proposes substantial on-site electricity generation, making the distinction between grid-drawn and independently produced power important when considering federal grid-cost requirements.

Project Jupiter's community benefits agreement with Doña Ana County, signed Nov. 12, 2025, states the project "will power itself with an onsite microgrid system" and that the system "will not impact existing customers' power reliability or costs," according to Organ Mountain News coverage of the agreement.

That commitment is now in dispute. Doña Ana County commissioners voted 5-0 on Oct. 27 to authorize formal notice of a potential breach of Project Jupiter's industrial revenue bond agreements after Oracle proposed connecting to El Paso Electric for what it described as less than 3% of the project's electricity needs.

Commission Chairman Manuel Sanchez said at the Oct. 27 meeting, according to the meeting transcript as reported by Organ Mountain News: "Just to make clear, the IRB, as written within the community benefits agreement, does require among the requirements that there is no connection allowed … All the generation for the facility would be on-site through the microgrid, and hence no connection to El Paso Electric would be allowed."

Whether Oracle's proposal constitutes a contractual breach has not been established.

The study's broader finding is that data center expansion can affect electricity costs across interconnected markets, even in regions that do not host the facilities. The bill's sponsors intend to push the legislation through Congress before the next session begins.