S&P Warns Rising Utility Rates Threaten City Finances

✓What's documented Sourced to S&P Global analysts speaking on a recorded S&P webinar, with rate data cited to a Wall Street Journal analysis.

S&P Global analysts said on a recent webinar that rising utility rates, pushed up in part by data center load growth, are becoming a "simmering risk" to municipal credit quality. U.S. utility rates have risen 38% since 2020, and if high rates push residents and businesses to relocate, the resulting tax-base erosion could squeeze the same cities' ability to fund infrastructure. It isn't yet moving bond ratings, but it puts a number on how the data center cost question reaches beyond household bills into public finance.

• S&P: U.S. utility rates up 38% since 2020, driven by data centers, climate change and other factors.
• S&P sector lead Sarah Sullivant: high rates relative to household income could shrink cities' tax base over time and 'reduce flexibility for public finance entities.'
• Not yet driving bond rating actions, but affordability is already a factor in S&P's utility credit analysis, the firm said.