data centers They consume a lot of electricityfrom there arise proposals as crazy as that of take them to space either submerge them in the sea to reduce its consumption. Technology companies face a problem of shortage of electrical energy, but the real problem is something else: data centers are causing the electricity bill to rise for all citizens. Now three US senators want to investigate it thoroughly.
A political question. They say in the New York Times that three Democratic senators have announced that they are going to investigate big technology companies for their role in increasing the electricity bill. Senators have sent letters to Microsoft, Google, Meta, Amazon, CoreWeave and other companies asking them to detail exactly what their data centers consume.
The bill increases have become a political issue and have played an important role in elections in several states. In the case of Virginia, where the largest number of data centers in the world are concentrated, Governor Abigail Spanberger’s campaign included proposals to require data centers to “pay their fair share.”
The problem. For the past 20 years, the US electricity system had been stuck with stable energy demand or very modest increases. Data centers have seen very abrupt growth. In 2023, data centers consumed 4% of all electricity in the United States and this is estimated to increase up to 12% 2028.
This abrupt increase in demand has forced electricity companies to modernize the network. The technology companies assume part of the cost, but not all, and the way to recover that investment is through the bill of all network users.
The discount trick. The technological ones, such as Amazon ensures that its data centers are not raising the bill and that they assume all the costs, contributing to improving the network for everyone. What they don’t say is that they benefit from enormous discounts, like the one they Amazon itself requested regulatory authorities in Ohio in 2024, where they are building a data center, a discount on the electricity rate. The problem is that the agreement is opaque and we do not know how much that discount was, but it is estimated that it could be 135 million per year, over a period of 10 years.
Who really pays? In many cases, technology companies pay for the infrastructure necessary to expand the network, but what about these discounts? According to a paper published by the Harvard Electricity Law Initiative in which they reviewed more than 50 regulatory cases, it is very common for electricity companies to offer subsidies to attract technology companies and the way to compensate for these discounts is to pass them on to all network subscribers, which ends up increasing the bill.
Unaffordable increases. According to the United States Energy Information Administrationin September electricity increased 7% compared to the same period of the previous year. Things change if we go to the cities near the data centers, where the increases have reached 267%, unaffordable figures for many citizens.
Proposals. There are states that are already legislating to prevent network customers from ending up paying the bill for data centers. This is the case of Michigan, which has put special rules for data centers. Companies must sign a contract of at least 15 years, face fines if they cancel before and pay at least 80% of the contracted power even if they do not use it. In addition, they must pay all the costs of the lines and services that are built to serve them.
However, these proposals could encounter difficulties due to the executive order that Trump signed and that prevents states from enacting laws that could stop the advance of AI, all to win the battle against China.
Image | Google
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