Maryland's Private Water Monopolies Skim Ratepayer Revenue While Data Centers Drain the Grid

A Daily Caller Foundation investigation found that Western Maryland residents are rationing showers and hauling buckets from creeks while their water bills climb into the hundreds of dollars per month.^[1][2] The immediate culprit is water scarcity; the structural culprit is ownership. Maryland operates roughly 26 privately owned water companies serving scattered populations, each a regulated monopoly extracting a return on rate base from customers with no alternative.^[1] That financial model is distinct from but reinforces the parallel crisis: AI data centers in neighboring Loudoun County, Virginia are consuming up to 5 million gallons per day equivalent to the water use of a town of 10,000 to 50,000 people, while simultaneously driving Maryland electricity costs up 6.5 percent nationally between May 2024 and May 2025.^[1][6]

The dual squeeze works like this. Private water utilities in Maryland operate under regulated rate-of-return models; they are permitted to earn a return on their capital and recover operating costs through customer bills. When water becomes scarce (due to data center demand, drought, or underinvestment in capacity), the utility's costs rise, rate cases follow, and customers pay. The utility's profit is a percentage of rate base; it has no financial incentive to reduce consumption or encourage rationing because consumption and rate base are how it earns its return. A municipal or public utility, by contrast, borrows at tax-exempt rates and takes no equity return; the same wires carry a lower cost of capital, and the governing body can prioritize conservation and public need over financial extraction. Maryland's privately owned patchwork means 26 separate entities, each negotiating with its own commission, each with its own capital structure, each extracting a return.^[1] Collectively, they have turned a resource constraint into a revenue opportunity.

The electricity side shows the same geometry. Data centers are driving demand across PJM, which operates the capacity market and the transmission system that Maryland customers pay for. Between 2024 and 2025 alone, PJM advanced almost $12 billion in new transmission infrastructure, costs that appear on Maryland supply-side bills.^[7] The capacity market itself is now driven by data center load growth, according to PJM's independent market monitor, with Maryland customers absorbing the price impact.^[7] A typical residential customer in Manassas, Virginia, near a major data center corridor, saw a $281 January 2026 electricity bill compared to roughly $100 the previous month, a shock he attributed directly to AI infrastructure coming online nearby.^[6]

The vulnerability is that neither private water utilities nor the electric utilities serving Maryland have been required, as a condition of serving data center load, to ring-fence that cost or ring-fence the income. Maryland's Public Service Commission approves individual water and electric rate cases as they come, but there is no statewide condition that prevents private water companies from using data center-driven scarcity as justification for rate increases, nor any mechanism forcing them to prioritize public supply over commercial consumption. In February 2026, the Maryland PSC approved a $2 million annualized rate increase for Maryland American Water, supporting $22 million in capital investments since 2019.^[4] The company serves 24,000 people in the Town of Bel Air; a residential customer using 4,000 gallons per month faced a roughly $10 monthly increase.^[4] That is modest on its face, but it comes while data center-adjacent water stress is forcing rationing in the same state and electricity bills spike from the same source.

The lever is divestment and municipalization. Maryland's charter allows municipalities to acquire and operate their own water systems. A municipalization campaign would allow a town or county to take control of its water infrastructure, retire the private utility's debt at fair value, and finance the system with municipal bonds at tax-exempt rates. The cost of capital would drop, no equity return would flow upstream, and the board would answer to customers, not to a distant private company. Several Maryland municipalities already operate their own light departments; municipalization of water is a direct path.